• Companies forecast a 5.6% overall increase insalaries for 2021, but more than half say they expect changes to salaryincrement levels.
• Nearly seven in 10 companies have implementeda hiring freeze
• 14% of companies expect lower bonus payoutsfor 2021, with one in two stating it is too early to tell

MANILA, PHILIPPINES - Media OutReach - 1 December 2020 - Salaries in thePhilippines are projected to increase in 2021 despite the economic fallout fromthe coronavirus pandemic. Companies in the Philippines are forecastingan average 5.6% overall increase in salaries for 2021, up from 5.3% this year.

This isaccording to the annual PhilippinesTotal Remuneration Survey (TRS) 2020 by Mercer, a global consulting leader in talent, health,retirement, and investments. The survey polled 416 companies acrossmultiple industries in the Philippines between April and June this year, withadditional surveys conducted in July and August in light of the fast-changingmarket environment.

The projectedsalary increments come on the back of an uncertain economic outlook for thePhilippines, with Gross Domestic Product (GDP) expected to contract by 8.3%this year. While growth is expected to rebound to 6.5% [1]in2021, downside risks such as a slower-than-expected global recovery that couldweigh heavily on trade and investment, have resulted in caution amongcompanies.

Floriza Molon, Mercer's Career Business Leader for thePhilippines said, "Due to the uncertainty, more than half of the companies haveindicated that they will delay the increase of salaries or revise salaryincrement levels. With sustained pressure on businesses to keep costsdown, we see that companies are taking a cautious approach with regards tosalary budgets."

Across industries surveyed, the Chemical industry isexpected to see the biggest rebound in salary increments at 5.5% in 2021, upfrom 3.9% in 2020. The Consumer, Life Sciences, Energy as well as Retail andWholesale industries also saw slight increases compared to last year.

Ms Molon added, "While thesalary increase budget remains stable in spite of the pandemic, what we areseeing is that companies are increasingly prudent with their compensationpolicies as well as the allocation of the salary budget. Some of theconsiderations include how business-critical the roles are, the potential andperformance of the employees, flight risk and availability of jobs in themarket." 

Variable Bonuses for 2020remained stable, but decreases expected in 2021

Overall, average budgeted bonuses for 2020 dipped slightly at 16%, compared to17% in 2019. The Life Science industry saw the highest increase at 23% comparedto 20% in 2019, while bonus payouts decreased in the Consumer, Logistics andShared Services & Outsourcing industries.

Ms Molon said, "91% of companies providedbonuses in 2020, reflecting their strong performance in 2019. However, weforesee a decrease in bonus payout in 2021 due to the uncertain economicenvironment."

Looking ahead, 14% of companiesexpect the bonus payout for 2021 to be less than the previous year, while 50% sayit is too early to tell. Only 8% of companies expect budgeted bonuses toincrease in 2021.

With the cautious businessoutlook, recruitment efforts are expected to slow in the year ahead. 69% ofcompanies in the Philippines indicated that they have imposed a hiring freezein 2020, with 10% reducing headcount due to the pandemic.

Embracing Flexible Working

The survey has also seen a shiftto remote working arrangements among companies in the Philippines. 67% of theorganization have implemented remote working arrangements in response to theCOVID-19 outbreak with 58% projecting that employees will be more likely to useflexible working arrangement post-pandemic.

TengAlday, Mercer's CEO for the Philippines said, "Companies in the Philippineshave successfully implemented flexible work arrangements amid the pandemic, withonly 14% of companies stating a decrease in the level of productivity. Weforesee more employers embracing flexible working arrangement which provides anopportunity for companies to review their compensation and total rewardspackages more holistically to adopt variable pay and other reward initiativessuch as work-from-home allowances to recognise and retain critical talent.

"As the financial impact of the pandemic continues to playout, companies are taking a cautious approach in light of cost pressures andthe need to protect their core business. We encourage companies to adoptstrategies that balance economics and empathy as employee engagement andretention will be critical in their road to recovery."

About Mercer’s Total Remuneration Survey

The TotalRemuneration Survey, Mercer's flagship annual compensation and benefitsbenchmarking study, identifies current pay practices and benefits policies, aswell as budget, hiring and turnover trends for the year ahead. In addition, Mercer also conducts regular pulsesurveys throughout the year to keep up with the impact of the rapidly changingbusiness environment and compensation and workforce trends.

Formore data and insights from Mercer's Philippines Total Remuneration Survey2020, please see here.

About Mercer

Mercer builds brighterfutures by redefining the world of work, reshaping retirement and investmentoutcomes, and unlocking real health and well-being. Mercer's more than 25,000 employees are based in 44 countries and thefirm operates in over 130 countries. Mercer is a business of Marsh & McLennan (NYSE: MMC), the world's leading professional services firm in the areasof risk, strategy and people, with 75,000 colleagues and annualized revenue approaching $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasinglydynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter