MANILA, Philippines — As businesses strive to recover from the pandemic's onslaught and persuade top personnel to stay, compensation hikes in the Philippines are likely to be restrained next year.

According to a research by American asset management company Mercer, local employers plan to raise average employee compensation by 5.3% next year. If implemented, this would increase salaries at a slower rate than the 5.5% average raise that workers are anticipated to receive this year.

Mercer's report was based on the findings of a firm survey conducted in June and July of this year. Some of these businesses are in the chemical, consumer goods, life sciences, and "high tech" sectors.

Except for the developed economies of Japan, Korea, and New Zealand, most countries in the Asia Pacific region are expected to see a decrease in salary increases, according to the report.

At home, there are growing calls for wage increases as multi-year high inflation has prompted Filipinos to tighten their belts. To tame the rapid price increases, the Bangko Sentral ng Pilipinas has issued a series of rate hikes, which may put strain on household finances by raising borrowing costs.

Additionally, some businesses are under pressure to increase the value of their compensation packages in order to both recruit and keep top people. Additionally, they are attempting to recover from a pandemic that brought several businesses dangerously close to financial disaster.

While layoffs have begun to decrease as firms recover in the Philippines, Mercer reported that resignations increased by an average of 10.2% last year, compared to the 2020 average quit growth rate of 7.9%.

According to Mercer, 15% of the Philippine companies who responded to the study anticipate a rise in employee turnover this year, while 70% predict little change in the rate.

According to Mercer, businesses must take special care to protect those employees who are most negatively impacted by inflation and concentrate compensation efforts on the supply and demand for talent to avoid losing their best employees.

It stated that "workers would forsake a wage raise for flexibility," underscoring the importance of providing flexible work schedules to employees in the face of the pandemic.

The need for companies to reevaluate their compensation plans to retain talent in a competitive labor market has increased, according to Kulapalee Tobing, regional industry and solutions leader for Asia Pacific at Mercer. "Real salary increases are still negative for many markets," she added.