Firms expected to hike salaries by 7%

PHILIPPINE CORPORATE salaries are expected to increase by an estimated 7% this year on the back of a slow but steady economic growth, an international human capital consulting firm said.

Companies operating in the Philippines see salaries rising by 7% this year, higher than last year’s 6.4%, and this will largely benefit those working in non-mainstream manufacturing and information technology-enabled services (ITES), according to the Salary Increase Survey of United States-based consultancy AON Hewitt.

Non-mainstream manufacturing sectors, or companies that produce handicrafts, woodcraft and furniture, as well as processors, had the highest projected increase this year at 7.7%.

ITES followed with a projected growth of 7.6%, while “Hi-Tech/ Information Technology” firms had the lowest projected salary increase at 5.1%.

The Philippine survey covered 86 companies across 20 primary industries preferring performance-based incentives as a mode of salary adjustment.

Five employee levels were included — top executive/senior management, middle management, junior manager/supervisor/professional, general staff, and manual work force.

The survey was conducted in July to August last year. Majority of the survey respondents were foreign-owned multinationals with full-time employees of 500 and below, and annual revenues of $50.1 million to $100 million.

AON Hewitt said 46% of the organizations surveyed expected a “slight improvement in their business,” while 16% said they expected to see the business “significantly improve.”

Management Association of the Philippines Vice-President Elizabeth H. Lee echoed the outlook. “Businesses [in the country] are seen to grow, with revenues growing as well,” she said in a telephone interview yesterday.

“That (the improving business climate) will temper or balance out the increase in wages,” Ms. Lee said, noting that the economy was expected to grow by 5%-7% this year.

University of the Philippines professor and labor industry expert Rene E. Ofroneo said: “If the same growth variables are present now, then the survey would hold true,” he said in Filipino.

“The increase in salaries of corporate workers addresses the issue of talent retention and the exodus of Filipino professionals from the country. If you want your workers to stay working in your firm then pay them higher,” Mr. Ofreneo said.

AON Hewitt’s survey showed middle management, which includes first line managers and department heads, would have the highest pay increase this year at 7.2%, up from last year’s 6.1%.

Top executive or senior management followed with a projected increase of 7%, followed by junior managers, supervisors, and professionals with 6.9%.

The expected boost in the country’s corporate salaries is the third fastest in the Southeast Asian region. India recorded the fastest projected growth at 12.9% (see related story on this page).

Vietnam and Indonesia had a projected increase of 11.5% and 7.5%, respectively, in pay this year and an actual rise of 10.4% and 7.9% in 2010. Singapore had the lowest anticipated increase at 4.4%. In Thailand and Malaysia, salaries are expected to rise by 5.8% and 5.3% this year, respectively. — Antonio Siegfrid O. Alegado, Businessworld