What to expect about the Projected Philippines' Salary Hike in 2023

Because the season of giving is here, we share with you some good news. Did you know that come 2023, you may experience a salary increase? This is according to Mercer's annual Total Remuneration Survey (TRS) 2022. Ready to discover how this good news came about? Let Lumina Homes give you a gist on what to expect on how this salary increase came to be.

What to Expect About the 2023 Salary Increase

But before we actually feel the real salary increase next year, here's what we need to know about it. This good news for many markets came to be after Mercer, an American asset management firm, released its annual survey results about current pay practices and benefits policies, and industry salary trends in the budget, hiring, and turnover. This Mercer's flagship annual compensation and benefits benchmarking study gives a market outlook to specific locations where the survey was done--in this case, the Philippines.

Survey Says: Various Industries Will Raise Salaries

Mercer surveyed different industries last April and June this year, and its survey results came from 447 organizations across 11 industries. In the study, it resulted to having thirty-six percent or more than one-third of the survey participants said that they will have a salary increase plan come 2023. Meanwhile, thirty-eight percent intend to remain competitive even if they will maintain their headcount.

From the industries surveyed, here are the Philippines' business sectors that will likely implement the salary increase. The shared services industry will offer the highest salary increment at 6 percent. They are followed closely by three industries, namely, High Tech, Life Sciences, and Logistics, all at 5.8%. On the other hand, the Services (non-financial) and chemicals industries, garnering 5.0% and 4.6% respectively, forecast the lowest salary increments.

Welcome News: What are the reasons behind the Salary Increase?

Floriza Molon, Mercer’s Career Business Leader for the Philippines, said that it has been a while since the country has experienced salary increases. The last time was pre-pandemic, last 2019. The Philippines are picking up post-pandemic, even though it is not that felt by most. This is due to high inflation and little to no salary increase in the past year. However, for 2023, there is a more positive outlook as the inflation-rising cost is forecasted to be lower, and salary increases for employees in the Philippines are expected. Hence, they will benefit from some real salary increase.

This is welcome news for many Filipinos as according to the study, the Philippine's median salary increment is above the Asia pacific average of 4.8 percent. With a 9.1 percent increase in India and a 2.2 percent in Japan, the Asia pacific average shows the divergence of pay progression between emerging and developed economies.

Another reason why the market is foreseen to have a salary increase, is because the Philippines, just recovering from the pandemic, also had a tighter labor market and buoyant job market resulting in a higher voluntary turnover this year.

According to reports, as of mid-2022, the average voluntary attrition rate for half-year was already at 6.7 percent. This is alarmingly high if you will compare it to 2021's full year rate of just 11 percent. On the other hand, since the pandemic was on its height, the voluntary attrition in 2020 was just 7.9. This is because the employees’ priority was on job security to secure basic needs, such as food, clothing, even an affordable house and lot to stay during the pandemic.

How Can Industries in the Philippines Cope with Salary Increase

However, salary increases pose as a challenge in both business size and salary budgets. Certain business units can attest that getting a salary increase is not easy in this global economy, due to rising inflation concerns. This is especially true when The Great Resignation witnessed how many employees contributed to the highest voluntary attrition rates in the Philippines in recent years. This is even validated by Godelieve van Dooren, Mercer’s CEO for South East Asia Growth Markets.

As a result, many companies experienced talent supply challenges which forced to accelerate their digitalization plans in such a dynamic environment like hybrid work. They also adjusted their operational costs to include their employees' mental and physical wellness.

With companies experiencing compounding economic conditions and experiencing difficulties attracting talent, they have shifted to more holistic benefits packages not only to adjust salaries and a clear compensation strategy, but also when they promote the continued growth of employees and prioritize employees' well-being and create a nurturing yet purposeful work environment that remains competitive.

If given the chance, leading organizations would not opt for frequent salary increase adjustments. Instead, they need to resort to other hiring and retention strategies that influence compensation growth.

Some of these business activities are sign on bonuses, helping to grab a deal for a budget-friendly yet decent house and lot for sale in the Philippines, development programs, relevant training, and offering flexible work arrangements. However, they also understand that because inflation hit a high this year, on top of these cost management workforce trends, employees need their salary increases.

What does this mean to Filipino employees?

For Filipino employees, this means good news. You can now choose which organizations can help in generating employment opportunities. The salary increase reflects continued growth among the tight labor market, which in turn, can supply to a growing business demand now that we are living in the new normal. While there are significant risks, you can now foresee the growth among businesses, including yours! Now you can even think of not just the basic needs, you can even save up for an investment. You can now stop renting a temporary home, but instead, own a house and lot in the Philippines. It may not seem easy, but with a positive outlook, as inflation rate is not as high as before, then as the salary increase for employees become annually, then Filipinos now have the means to acquire stable investments.

Make a Good Investment Out of Your Salary

It's never too early to plan on where your salary increase will go. Should you shop similar to a pre-pandemic level or not? Higher Salaries should not mean you should shop for your heart's content. It should be spent with the most important part of your life, your family. Don't you think that one of the best Christmas gift to give your family is your own house and lot? So don't be shy, speak to a Lumina accredited seller and inquire about your dream home!