Average salary increase budgets for organizations in Asia Pacific (APAC) are expected to reach 5.0 percent in 2026, a marginal rise from 4.9 percent in 2025, according to a new report by global advisory, broking and solutions company WTW.
It said that in the Philippines, employers project salary increase budgets to hold steady at a median of 5.5 percent in 2026, consistent with trends observed since 2024.
While 96.1 percent of organizations conducted regular salary reviews in 2024, this figure dipped slightly to 92.6 percent in 2025, as more companies reported either freezing (up to 3.9 percent from 2.3 percent) or postponing (up to 3.5 percent from 0.9 percent) reviews. WTW said this reflects a cautious approach amid global economic uncertainties.
The stability in salary budgets comes against a backdrop of varied organizational strategies. Nearly half of organizations have reduced their salary budgets compared with the previous pay cycle, primarily due to anticipated recession or weaker financial results (47.8 percent) and cost management concerns (43.5 percent).
A smaller segment (14.3 percent) is projecting higher budgets, largely driven by inflationary pressures (26.1 percent), tight labor markets (19.6 percent), and anticipated stronger financial results (19.6 percent).
“Although overall budgets remain stable, the real transformation is happening behind the scenes,” said Chantal Querubin, rewards data intelligence practice leader for the Philippines at WTW.
“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,” Querubin said.
About 76.9 percent of organizations in the Philippines plan to maintain their headcount within the next 12 months, a 12.7-percent increase from 2024.
Twice as many organizations intend to increase headcount (15.4 percent) compared with those planning reductions (7.7 percent). The talent landscape appears to be easing in 2025, with 57 percent of organizations reporting little to no difficulty in attracting and retaining employees, up from 50 percent in 2023.
Employers are also adjusting their compensation programs to supplement regular salary reviews amid rising operating costs and intensifying labor market pressures. Actions taken or planned include: conducting compensation reviews of all employees (54 percent), compensation reviews 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).
More organizations have also undertaken or are planning complementary actions to address talent needs and support employees. These include improving employee experience (73 percent), increasing training opportunities (62 percent), enhancing health and wellness benefits (60 percent) and offering more workplace flexibility (58 percent).
“In today’s Philippine labor market, shaped by both local and global pressures, employers are shifting from rapid expansion to maintaining a stable and resilient workforce,” Querubin said.
“Instead of broad hiring or large budget increases, companies are taking a more measured approach, carefully managing costs while staying focused on long-term talent priorities such as upskilling, succession planning, internal mobility, and employee wellbeing,” said Querubin.
Shai Ganu, managing director and global leader for executive compensation and board advisory at WTW, said “employers in the region are concerned about losing critical talent, with change management, talent attraction and employee experience being significant issues.”
A recent WTW survey across APAC reveals companies are adapting to economic shifts through various strategies, with cost reduction emerging as a key approach. Nearly half are considering operational cuts, including headcount reductions.
The survey also indicated a pivotal shift toward intra-Asia resilience, with 37 percent of companies exploring new markets within Asia and 33 percent considering diversifying supply chains from the West to within Asia. About half of the companies reported no significant changes planned for their compensation plans. Of those considering changes, nearly a quarter are looking at adjusting incentive metrics (26 percent) or modifying performance goals to account for volatility (25 percent).
“These adjustments aim to align compensation with the new economic realities and maintain employee motivation and performance,” Ganu said. “Additionally, the ‘From Asia – For Asia’ strategy is likely to impact trade and talent flows, impacting compensation outcomes within the region.”
Overall, trends in the Philippines and broader APAC reflect a cautious yet adaptive approach to workforce management amid economic shifts. Companies are balancing maintaining stability and addressing emerging challenges in the labor market, it said.
