Pay raises in Philippines seen edging up in 2027 — WTW

PHILIPPINE COMPANIES expect to raise salaries by a median of 5.1% in 2027, slightly higher than the 5% average increase this year, as employers balance rising costs with the need to retain talent, according to a survey by advisory firm WTW Plc.

“In the Philippines, employers are taking a more deliberate approach to compensation planning as they manage rising business costs while staying competitive for critical talent,” Chantal Querubin, rewards data intelligence practice leader for the Philippines at WTW, said in a statement on Monday.

Among Southeast Asian countries, the Philippines’ projected 5.1% salary increase for 2027 is lower than Vietnam’s 7% and Indonesia’s 6%.

However, it is still above the projected 4.7% salary hike in Malaysia, 4.6% in Thailand, and 4% in Singapore.

Ms. Querubin said companies are increasingly using data-driven compensation strategies to improve employee retention, skills, and performance.

The Salary Budget Planning report, which surveyed 408 organizations in the Philippines from March to May, found that more than half of employers said their actual 2026 salary budgets matched their original plans.

About 18.8% reported spending less than initially budgeted, while 8.9% said their salary budgets exceeded earlier projections.

WTW said compensation planning continues to be influenced by inflation, business performance, and changing labor market conditions.

Inflation averaged 4.8% in the first six months of the year. The Philippine central bank expects the headline print to settle at 6.4% this year and 4.5% in 2027.

Across the Asia-Pacific region, median salary increases are expected to stabilize at 4.9%, indicating that employers are adopting a more measured approach to compensation while continuing to compete for skilled workers.

The report also found that 71.9% of organizations plan to keep current headcount levels over the next 12 months. Only 17.5% of firms expect to increase their staff, while 10.5% anticipate workforce reductions.

“The findings reveal that workforce stability and talent retention remain a key organizational priority amid ongoing economic uncertainty,” WTW said, adding that many firms are investing in efforts to retain talent.

These include improving employees’ experience (43.9%), expanding training and development (39.5%), and enhancing health and wellness benefits (37.5%).

“With compensation budgets remaining constrained, organizations have limited ability to differentiate broadly across the workforce. As a result, pay investments are increasingly being concentrated on critical roles and key talent segments, while compensation decisions for the wider employee population become more standardized,” Patrick Marquina, senior director for work and rewards at WTW Philippines, said in the same statement.

Sought for comment, Benjamin B. Velasco, an assistant professor at the University of the Philippines Diliman School of Labor and Industrial Relations, said it is difficult to determine if a 5% salary increase is sufficient to attract talent as employees weigh hikes against inflation and migration opportunities.

“There are several factors that go into employee decisions to apply and stay. One is comparison with inflation rate, offers from other firms in the same industry and offers abroad as migration is an option,” Mr. Velasco told BusinessWorld in a Facebook Messenger chat.

He said that highly productive and profitable sectors such as business process outsourcing (BPO), finance, and power have the capacity to offer above-average increases.

On the other hand, Mr. Velasco said occupations cutting across industries, such as janitorial roles, usually offer below-par adjustments.

Mr. Velasco stressed that wage hikes and the cost of living will remain “hot button issues” through 2027, as workers deal with elevated inflation.

The wage board last month approved a dual tranche P85 increase in the minimum wage in the National Capital Region (NCR). Starting July 25, the minimum wage in the NCR will increase by P60, while the second tranche or the P25 hike will take effect in January 2027.

The Foundation for Economic Freedom (FEF) called for the suspension of the NCR wage hike, saying it could trigger severe unintended economic consequences that would harm the “most vulnerable” population.

In a statement, FEF said the wage hike could fuel an inflationary wage-price spiral, hurt small businesses, discourage companies from making investments, and threaten macroeconomic stability.

“As companies pass these sudden labor costs on to consumers, the prices of basic commodities rise, adding further upward pressure to already elevated inflation,” it said.

FEF said micro, small and medium enterprises (MSME) are facing the forced wage hike “at the worst possible time.”

“Smaller businesses are already reeling from the twin pressures of falling consumer demand and surging global oil prices, which have significantly increased operating and logistics costs,” it said, adding that MSMEs could be pushed to the brink of insolvency.

FEF called for the return to “evidence-based, tripartite wage-setting that aligns wage growth with productivity gains and macroeconomic realities.” — Erika Mae P. Sinaking