Good News? Your Salary Increase in 2023 Could Exceed This Year's

(SPOT.ph) Philippine companies are likely to give their employees a bigger pay hike in 2023, a study showed as Filipinos struggle to cope with soaring prices of basic goods and services.

On average, companies in the Philippines are expected to give out pay hikes of about 5.7% next year compared to the average of 5.5% in 2022 based on global advisory firm Willis Towers Watson's Salary Budget Planning Report.

Salary increase for the coming year

For 2023, the Bangko Sentral is targeting full-year inflation at 2% to 4%, which if met, means that your projected salary increase next year will not be lost to maintaining your lifestyle.

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"Compounding economic conditions and new ways of working are leading organizations to continually reassess their salary budgets to remain competitive," Patrick Marquina, Work and Rewards Leader at WTW Philippines said in a statement.

The survey, conducted in April and May 2022, covered 385 companies in the Philippines across different industries.

What's driving salary hikes?

The following were the most cited reasons of companies for reporting higher salary hikes:

• Concerns over a tighter labor market
• Concerns related to cost management e.g., inflation rising cost of supplies 
• Employee expectations for higher increases driven by inflation

The study also highlighted the persisting impact of 'The Great Resignation' on companies across the country with some 86% saying they are experiencing difficulties attracting talent this year but the figure is expected to go down to 38% in 2023.

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Some 84% of companies meanwhile reported difficulty retaining employees this year, but that number is expected to drop to just 49% next year according to WTW.

"With significant risks in the global economy, continued high inflation, and employers grappling with talent supply challenges, organizations need to get more creative to address attraction and retention challenges," Marquina said.

Which industries will benefit the most?

Among different industries, WTW said the financial technology sector or fintech was projected to give the highest average salary hike of 7.1% next year followed by energy and natural resources, and financial services at 6%.

Consumer product companies are expected to increase their pay hike budgets to 5.8% in 2023 while high-tech and pharmaceutical companies will increase theirs to 5.7% from 5.5% this year.

However, despite plans to give out higher pay hikes next year, the majority of companies at 65% said they were not looking into making more frequent salary increase adjustments.

Most companies instead are taking non-monetary actions to attract and keep talents with some 65% of respondents saying they have increased workplace flexibility and another 20% planning to do so in the next couple of years.

Nearly half or 45% of companies meanwhile are enhancing recruitment offers with sign-on bonuses and incentive rewards, the study found.

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