MANILA, Philippines — Philippine employers expect budgets to fund salary increases in 2026 to return to the same level seen in 2024, as they take a cautious approach amid global economic uncertainties, according to a report from global advisory, broking and solutions firm WTW.
The Salary Budget Planning Report compiled by WTW’s Rewards Data Intelligence showed that employers in the Philippines project salary increase budgets to return to a median of 5.5 percent in 2026, consistent with the level seen in 2024, following a slight dip to 5.3 percent this year.
The report found that nearly half of organizations in the Philippines have lowered their salary budgets compared to the previous pay cycle, mainly due to anticipated recession or weaker financial results (47.8 percent) and cost management concerns (43.5 percent).
Meanwhile, 14.3 percent of firms in the country expect higher budgets citing inflationary pressures (26 percent), labor markets (19.6 percent) and expectations of stronger financial results (19.6 percent).
“Although overall budgets remain stable, the real transformation is happening behind the scenes. Employers are becoming more strategic in how they distribute compensation, prioritize investments and define the results they aim to achieve. Rather than simply reacting to economic trends, companies are proactively reshaping their approach to better align with broader business objectives, even in uncertain times,” Chantal Querubin, Rewards Data Intelligence practice leader for the Philippines at WTW said.
The report also found that 76.9 percent of organizations in the Philippines plan to maintain their headcount within the next 12 months. This shows a 12.7 percent increase compared to 2024.
Of the remaining organizations, 15.4 percent intend to increase their headcount, while 7.7 percent plan to trim their workforce.
In terms of talent, 57 percent of organizations experienced little to no difficulty in attracting and retaining employees, an improvement from 50 percent in 2023.
Amid rising operating costs and labor market pressures, employers are making adjustments to compensation programs.
Actions being taken or planned include conducting a compensation review of all employees (54 percent), compensation review of specific employee groups (49 percent), raising starting salaries (44 percent), using retention bonuses and spot awards (39 percent) and adjusting salary ranges more aggressively (38 percent).
To address talent needs and support employees, many organizations are also considering other actions including improving employee experience (73 percent), increasing training opportunities (62 percent), enhancing health and wellness benefits (60 percent), as well as providing more workplace flexibility (58 percent).
Amid local and global pressures in the labor market, Querubin said employers are taking a more measured approach in terms of managing costs and talent through upskilling, succession planning, internal mobility and employee wellbeing.
“These strategic areas are becoming essential to sustaining workforce capability and competitiveness over time,” Querubin said.