PHILIPPINE companies are expected to see a drop in new hires and an increase in pay for their existing employees next year, according to Mercer Total Remuneration Surveys (TRS).
Based on the TRS, Mercer said 45 percent of companies are keen on hiring in 2020, lower than the 50 percent in 2019.
However, the TRS results showed that salary increase is forecast to grow to 6 percent in 2020, from 5.5 percent in 2019.
“Given the stabilizing voluntary turnover rate, the focus of most organizations is turning to upskilling and retaining key talent. However, 66 percent of companies in the Philippines don’t have a formal retention policy in place,” Mercer said in a statement.
Mercer said the consumer goods, energy and high-tech industries are predicted to have the highest salary increases at 6 percent.
The inflation rate, the TRS results showed, is projected to drop to 3.3 percent in 2020 from 3.8 percent in 2019.
The TRS results also showed that across industries, the voluntary attrition rate is at 6.2 percent in the first half of 2019.
However, the logistics industry in the Philippines has the highest involuntary turnover rate at 7.1 percent for the second quarter.
In 2018, the full-year attrition rate stood at 10.9 percent with the SSO (Shared Services and Outsourcing) industry having the highest voluntary turnover rate of 14.6 percent with the average years of service at three years.
“The top reasons cited for employees leaving their organization in Asia varies by age group and gender. The top 3 reasons for employees leaving their organization are competitive pay, manager interaction, and a lack of clear career path and job security,” Mercer said.
Gen Z
Meanwhile, as Gen Z starts working in 2020, Mercer said companies are also reviewing employee benefits.
Floriza Molon, career business leader, Mercer Philippines, said as much as 55 percent of Filipino companies are already reviewing or changing their benefits package.
This includes the 43 percent who are considering to increase budgets for employee salaries and the 21 percent who are increasing budgets for employee benefits.
“While the country’s population is young with a median age of 24 years, workplaces are increasingly becoming multigenerational, as Generation Z steps into their first jobs and joins millennials, Gen X and Baby Boomers at work,” Molon said.
“At the same time, the rise of the gig economy is growing demand for flexible work arrangements. These emerging realities challenge companies to have more compelling and differentiated value propositions, increase pay transparency, and rethink pay for performance, so they can attract, retain, and manage talent,” she added.
Apart from the packages, companies are also adjusting to the role changes driven by automation and artificial intelligence.
Mercer said companies are offering a wider variety of incentives and differentiating rewards for high performers.
Investments in rewards, Mercer said, should reflect a company’s strategic focus in order to align with business objectives.
“As the pace of change accelerates and we enter into this new world of work, companies should rethink how they can be future fit by putting their people at the heart of the change,” Puneet Swani, senior partner and career business leader for the International Region at Mercer said.
“Whether embracing digitalization, building competencies and skills needed for future competitive advantage or creating the right work environment and culture, changing the way organizations invest in their employees will yield a greater return for the business far into the future,” Swani added.
The TRS is Mercer’s flagship annual compensation and benefits benchmarking study that identifies key remuneration trends and predicts hiring and salary increase.
This year the total number of companies participating in this survey across various industries in Philippines increased to 433.
Mercer also conducts regular pulse surveys throughout the year to keep up with the impact of the rapidly changing business environment and compensation and work force trends.