Four in five employers in the Philippines see competition for talent as the number one business issue influencing their strategy for employee benefits in 2023. Despite rising costs, an increasing number of employers are targeting an ‘above market’ benefits position to attract top talent. That is according to the 2023 Benefits Trends Survey by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company.
The survey found that competition for talent (80%) is the most important factor influencing organizations’ benefits strategies in the Philippines. Rising costs, which was not among the top four concerns in 2021, has now risen to second place (54%), a sign that employers are increasingly under pressure to balance their budgets and evolve benefits strategies. Although the focus on flexible working arrangements has dropped slightly from 2021, it is nevertheless a priority at third place, followed by an increased focus on inclusion and diversity.
While employers desire to improve benefits, there is increasing pressure to manage costs and optimize the value of benefit programs. More than half of employers cited that persistence of higher inflation (64%), and a weakening economy and business environment (57%) would have a significant impact on their benefits budgets in the next two years.
“The current state of the economy in the Philippines is putting employers in a precarious position, as they balance winning the competition for talent and contending with the rising cost of services, while budgets remain tight. Despite the challenges, it is clear that employers recognize the urgency in delivering more efficient benefit programs and remain committed to improving their portfolios. The key now will be to develop a truly equitable approach that not only tailors to the individual needs of the workforce, but also ensures that the value of their investments is optimized to become more cost-effective,” said Nel Badal, Director of Health & Benefits, Philippines, WTW.
The results of the Philippine survey mirror the views of employers from the wider Asia Pacific (APAC) region, which also identified competition for talent, rising costs, flexible work arrangements and the focus on inclusion and diversity as the top four business issues influencing their organizations’ strategies for benefits.
Employers in the Philippines see health benefits (75%), mental health support (44%), career training and development (44%) and risk and insurance benefits (34%) as the most important benefits in their portfolios.
Elevating all aspects of benefits to improve market positions and competitiveness
Looking ahead, employers in the Philippines recognize the importance of achieving ‘above market’ positions for their benefits portfolios over the next two years. While only 26% of employers describe their current career, training and development benefits as ‘above market’ relative to their main competitors, 66% desire to reach this position in the next two years. This is followed by health benefits (32% ‘above-market’ position currently vs. 61% desired ‘above-market’ position), mental health support (24% current vs. 59% desired) as well as financial wellbeing / short-term finances (19% current vs. 55% desired).
At the same time, respondents expressed a strong desire to improve their current benefits portfolios to compete with their competitors. Close to half (43%) said they are looking to improve the positions of their benefits in career, training and development, followed by financial wellbeing / short-term finances at 41%, mental health support at 39%, as well as family and caregiving support at 37%.
In terms of benefits financing, employers are taking more aggressive actions to manage the budgets of their benefits programs, with 83% planning to improve contract terms with their vendors and more than two-thirds (69%) looking to secure additional funding for their benefits programs. More than half of the respondents (62%) are also looking at mitigating retirement plan risk, while 58% are planning to bundle services into one package from a single vendor.
Philippine employers are also looking at ways to optimize employee experience and engagement, with 54% planning or considering to provide a single digital platform where employees can access all benefits and services. Almost half (48%) are also planning or considering more tools and services to help employees choose the best options when using their benefits.
“Our survey shows that employers are rethinking their benefits strategies to achieve ‘above market’ positions and adapt to employees’ fast-evolving preferences in the near future. This will be a critical step in bridging the gaps of their existing programs and more importantly, help to effectively manage business priorities such as rising cost and the competition for talent.
Companies that can differentiate themselves and implement holistic benefits programs will stand to gain a strong advantage against their competitors. To achieve this, they must keep their ears close to the ground and enhance the employee experience by leveraging on data and technology, to ensure that they are meeting the needs of a diverse workforce. The answer to this is an integrated and sustainable approach to their benefits strategies built on flexibility, where employers can adapt effectively to employees’ evolving needs without compromising on the priorities of the business,” said Cedric Luah, Managing Director and Head of Health & Benefits, International, WTW.