Philippine companies have budgeted an average salary increase of 5.3 percent for 2027, according to Aon plc, a global professional services firm. Additionally, effective September 26, minimum wages will increase by 60 pesos daily to 795 pesos.
Wage Hikes Across Sectors for 2027
In consulting, business and community services, companies are planning the biggest increases next year, with salaries expected to rise 6.7 percent; for life sciences and medical services, pay is projected to increase 5.8 percent; technology companies plan to increase wages by 5.2 percent; manufacturing conglomerates project an increase by 4.9 percent; and financial services would increase salaries by 4.2 percent. These are all gathered from a study conducted by Aon plc.
Artificial Intelligence vs. Skilled Workers; Planned Workforce Expansion amidst Attrition
One of the driving factors behind the wage hikes is artificial intelligence. Though companies grapple the question of investing in AI infrastructure or a skilled workforce, they have budgeted an increase in worker salaries on average, according to Aon plc. It begs the question, summarily: “where should companies put their money—in technology that can automate work, or in the people whose skills have long been essential to their growth?”
Additionally, the Philippines ranks as a country where attrition rate is high among ASEAN regions. 17.3 percent compared to Singapore’s 16.8 percent and Malaysia’s 17.4 percent. This scarce talent, as pointed out by the study, has driven companies to offer more competitive salaries to attract and retain their workforce for the long term. “With AI accelerating change across industries, organizations are seeking deeper intelligence beyond historical benchmarks”.
Limited Economic Impact: Increased Cost of Living, Oil, Goods, Energy, and All
This said, Australia and New Zealand Banking Group Ltd research concludes that the hikes would have a “limited” impact on the overall economy. During the first half of the year, the economic growth of the country had been sluggish; only growing by 2.6%. This was brought upon by externalities such as the oil crisis and a weakening Peso.
Where the Iran war, which has been waged since February, have affected global energy markets, all sectors took the brunt of the impact. With the closure of the Hormuz Strait, gas prices increased exponentially. This affected motorists back home with rising petrol and diesel costs. However, this expanded—and permeated—to other sectors. As gas is a crucial element and cost factor to logistics, energy creation, and transport, goods and services have increased in cost. Beyond the automobile; fruits, vegetables, electronics, meat, produce, electricity, and much more have reflected volatility in costs. The definitive effect is clear: the crisis has trickled down to the most minute and mundane of consumer touchpoints.
This has increased the cost of living by over 7 percent. For a household whose budget is 50,000 pesos per month, this translates to 3,500 pesos. That would be enough for a tank of gas, a week’s worth of groceries; electricity for weeks, clothing, food, and so on.
Consumer spending has thus seen a decline, reflected by a lower demand that has lowered manufacturing output in the country. For 3,500 pesos, one would be wary and more conscious about where their money goes—and how far it can be stretched. Certain sacrifices in one or more areas have to be made to keep one’s budget the same; and this simple logic is what stagnated (and some say lowered) the purchasing of goods. Economics state that this has concretely lowered the purchasing power of Filipinos.
Time will tell if this stimulus in wages will ease the economic burden brought about by the externalities. This is a game of catch-up. Should wages directly increase with relation to the cost of goods, will the economy be better? Or would consumer sentiment about saving their money because of the volatile environment keep the growth sluggish? It is this question that policy makers, companies, economists, and the government are seeking to find out.
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