80% of PH businesses plan to increase salaries

MANILA, Philippines – A business survey showed that an overwhelming 80% of Philippine business plan to increase salaries of existing employees, instead of hiring new ones, in the next 12 months.

These salary increase plans made by the survey respondents in the 2nd quarter (April to June) will likely be in line with or higher than inflation, according to the latest Grant Thornton International Business Report, which indicates the global mood among business leaders.

None of the businesses intend to reduce pay, noted the survey results, which were released on Monday, July 16, by audit, tax and advisory services firm Punongbayan & Araullo (P&A).

“You expect business leaders to adjust where they can considering the new realities of their operations,” explained Marivic Españo, P&A’s chair and chief executive officer. “Unfortunately, this quarter that adjustment involves holding off on hiring more people and instead focusing on coming up with competitive pay packages for their existing team.”

The survey noted that “employment expectations” among the respondents showed a noticeable drop: In the 2nd quarter, only 28% of the businesses expect to add new employees in the next 12 months, lower than the 42% in the first quarter.

Optimistic, but constrained

The Philippines actually was the 2nd most optimistic among the 40 economies the IBR covered. The report surveyed 12,000 businesses worldwide.

The Phiippines’ score of 90% — representing the proportion of companies reporting they are very or slightly optimistic minus those reporting they are slightly or very pessimistic — put it just below Peru’s 96% and at par with Chile’s 90%.

In the first quarter (January to March 2012) the Philippines was at the 4th spot.

However, they are faced with several business constraints.

Roadblocks to growth include information and communications technology-related concerns, which were cited by 32% of the Filipino business leaders.

They also cited the lack of long-term financing and shortage of working capital. These jumped big time: 18% from 6% last quarter to 18%, and from 12% last quarter to 22%, respectively.

Financial performance

Local respondents also said they are more worried about their top-line than their bottom-lines.

For the 2nd quarter, 40% of local respondents expect higher profits, same as last quarter. However, they revenue expectations dropped to 44% in the 2nd quarter from 48% in the first.

To cope, respondents said they will not hire and will hike prices. About 30% expect to increase prices from only 14% in the 1st quarter.

“Costs attendant to doing business, such as oil prices for example, which were on the high end at the start of the second quarter, are normally passed on to consumers, so business leaders are naturally looking at a drop in volume sales,” explained Españo.

– Rappler.com