EMPLOYERS are keeping salary budgets low, citing inflation, cost management concerns, tighter labor markets, and weaker financial results as key factors, according to a recent study by risk management, insurance and consulting services firm Willis Towers Watson (WTW).
In its report, WTW disclosed 34.6 percent of companies in the Philippines have lower salary budgets for 2024 compared to last year. The median pay increase is 5.6 percent, slightly down from 5.7 percent in 2023.
“Employers are more conservative with their salary budgets as they look to longer term stability in their employee base,” WTW said.
Overall salary budget increases are expected to remain flat at 5.6 percent next year.
WTW rewards data intelligence leader Chantal Querubin pointed out that digitalization has had an effect on compensation.
“Tech roles such as those in artificial intelligence (AI) are seeing double-digit salary growth in many markets,” Querubin said. “The transformation potential of AI has made it the most sought-after technology discipline in the global talent market.”
Querubin added that organizations worldwide are ready to invest in skilled professionals who can boost innovation and growth in AI to be ahead of the competition.
“As AI and other technologies become more prevalent, employers need to consider how they can leverage these for their business, and whether they ought to train their workforce for it, or recruit digital talent to facilitate digital transformation,” Querubin explained.
More hires in 2025
WTW also revealed that 24.4 percent of companies plan to hire more employees in 2025, especially in business services, leisure, banking, technology, and energy.
On the other hand, 6.1 percent of the firms plan to reduce staff, and 69.5 percent will keep their current workforce size.
“While attrition remains high in certain areas, many employers in the Philippines are reporting that the intense wave of resignations and turnover has stabilized and become more manageable,” WTW said. “Organizations are now focusing on retention strategies and workforce planning with greater confidence.”
To adapt to current market conditions and employee needs, WTW said, organizations are making key changes. These include improving employee experience, focusing on diversity, equity, and inclusion, and offering more training opportunities.
“Having the right human resources (HR) metrics is essential for employers to design programs to meet their workforce’s specific needs,” Querubin said. “Data-driven insights ensure strategies are aligned with organizational goals, ultimately driving sustained growth, long-term success and competitiveness.”
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