Beyond paychecks: Employers re-calibrate compensation strategies

Companies in the Philippines are making a clear strategic move, as recent findings showed they are focusing on careful financial management and maintaining stable workforces, even as they plan for employees to receive steady pay raises.

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Wage hikes in the country are projected to remain steady at a median of 5.5 percent in 2026, continuing a trend observed since 2024. Despite this seemingly modest increase given the rising cost of living, Filipino wage earners are still relatively well-positioned.

The latest WTW Salary Budget Planning Report indicated that the projected 5.5 percent average increase for the Philippines is higher than the broader Asia Pacific (APAC) region.

According to global advisory firm WTW, average salary increase budgets in the APAC region are expected to rise from 4.9 percent in 2025 to 5.0 percent in 2026.

The Philippines' projected 5.5 percent median salary increase for 2026 places it favorably within the APAC region, ranking fourth among 13 countries, trailing only India (nine percent), Vietnam (seven percent), and Indonesia (6.1 percent).

This stable outlook for Philippine salaries unfolds against a backdrop of diverse corporate strategies. While nearly half of Filipino companies (47.8 percent) have reduced their salary budgets, primarily citing anticipated recession or weaker financial performance and cost management concerns (43.5 percent), a smaller but notable segment (14.3 percent) is projecting higher budgets.

WTW said these increases are largely driven by inflationary pressures (26.1 percent), persistent tightness in the labor market (19.6 percent), and expectations of stronger financial results (19.6 percent).

Despite overall stability, there's a subtle shift in how companies approach compensation reviews.

In 2024, 96.1 percent of organizations conducted regular salary reviews, a figure that slightly decreased to 92.6 percent in 2025.

The marginal decline reflects a more cautious stance, with more companies opting to either freeze (up from 2.3 percent to 3.9 percent) or postpone (up from 0.9 percent to 3.5 percent) their reviews, largely attributed to current global economic uncertainties.