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Philippines

Basic Economic Summary

Overview

The Philippines’ dynamic economy is rooted in the country’s labor market. The majority of the Philippine population comprises the young, attracting more foreign investors to venture into the country’s talent pool. Moreover, the Philippines’ archipelagic structure bears a lot of tourist spots for travelers and has contributed to the success of the country’s tourism industry. 

Basic Information

  • Local Languages: Filipino (Official), English (Official)
  • Major Economic Hubs: Manila, Cebu, Davao, Zamboanga, Cagayan de Oro, Baguio, and Vigan
  • Currency: Philippine Peso (PHP)
  • Population: 112.15 million (2022)
  • Date Format: dd/mm/yyyy

Useful Information

  • GDP Per Capita (in USD): 3,300.00
  • Exchange Rate (PHP/USD): 0.020
  • PISA Ranking: 76*
  • Number of University Graduates (2019):796,576*

Local Universities

Renowned Local Universities:

University Ranking
University of the Philippines Diliman World Ranking: 1434 ; Local Ranking: 1
Ateneo de Manila University World Ranking:1617 ; Local Ranking: 2
University of Santo Tomas World Ranking: 1990 ; Local Ranking: 3
De La Salle University World Ranking: 2192 ; Local Ranking: 4
University of the Philippines System World Ranking: 2837 ; Local Ranking: 5

Salary Data

Average Salary of Jobs:

Job TitleAverage Salary Range (PHP)Average Salary Range (USD)
Accounting Manager83,333 – 166,6661,735 – 3,470
Web/Mobile App Developer108,333 – 250,0002,275 – 5,250
Data Scientist125,000 – 208,3332,625 – 4,375
Test Analyst83,333 – 158,3331,750 – 3,325
Project Manager166,667 – 333,3333,500 – 7,000
Sales Manager108,333 – 425,0002,275 – 8,925

More information on salaries in the Philippines can be found on Robert Walters’ 2020 salary guide.

20%-40% salary rises is expected for job movers in 2020. For tech professionals staying in a role, 22% expect a 0-6% annual salary increment, 53% expect a 7-15% increment while 25% expect a 15%+ salary increment.

Talent Sourcing Tips

More information about job portals in Philippines can be found here.

Taxes

Employer Payroll Tax

Type of Tax Contribution (%)
Social Security (SSS) 73.70 PHP – 1178.70 PHP
Health Insurance (PHIC) 1.5% ***
Home Development Mutual Fund (HDMF) 2%

***: Updated as at 2020, the rate increases by 0.25% per annum. Links to Social Security Contribution , PHIC and HDMF contributions.

Employers may also decide to provide de minimis benefits (allowances) to employees which will not be taxed. It is not mandatory, but highly encouraged.

Employee Payroll Tax

Type of Tax (i.e. Social Insurance) Contribution (%)
Social Security (SSS) PHP 80 – PHP 800
Home Development Mutual Fund (HDMF) 1% (Below PHP 1,500)
  2% (Above PHP 1,500)
Health Insurance (PHIC) 1.5%***

***: Updated as at 2020, the rate increases by 0.25% per annum. Links to SSS, HDMF and PHIC.

Employee Monthly Income Tax

Net Taxable Income (PHP) Contribution (%)
< 20,833.33 0
20,833.33 – 33,333.33 20% of the excess over P20,833.33
33,333.33 – 66,666.67 P2500 + 25% of the excess over P33,333
66,666.67 – 166,666.67 P10,833.33 + 30% of the excess over P66,666.67
166,666.67 – 666,666.67 P40,833.33 + 32% of the excess over P166,666.67
666,666.67 P40,833.33 + 32% of the excess over P166,666.67

The Philippines follows a progressive income tax model. Link to Employee Income Tax.

Minimum Wage & Payroll

Minimum Wage

Minimum wage ranges from PHP 290 (US$5.70) to PHP 537 (US$10.61) a day, depending on region.

Link to Philippines Minimum Wage

Payroll Cycle

Salaries are usually paid bi-monthly on the 15th and the 30th of every month.

Bonus

13th month salary

The 13th-month pay in the Philippines is equivalent to 1/12 of the basic salary received by an employee during the year.

Working Hours & Statutory Leave

Maximum working hours

No employee must work more than 8 hours a day, there is a mandatory break time of at least 60 mins.

Maximum overtime hours

There is no limit to overtime hours in the Philippines.

Overtime pay

Work done beyond 8 hours of additional work pay on ordinary work day:

Additional 25% of pay rate

Work-on-rest-day pay

Work HoursPay
Work done beyond 8 hours of additional work pay on rest day, special dayAdditional 30% of pay rate
Work done on special day falling on employee’s rest dayAdditional 50% of pay rate
Work performed on regular holiday falling on employee’s rest dayAdditional 30% of pay rate or total of 260% of work performed

Public Holidays

11 public holidays and 9 special non-working days can be found here.

Annual Leave

5 days service incentive leave with pay for employees who have rendered at least 1 year of service.

Sick Leave

5 days service incentive leave with pay for employees who have rendered at least 1 year of service.

Parental Leave

Maternity Leave
Employee StatusLeave
Female worker paid Social Security for at least 3 months of the prior 12 months100% of daily payrate for 60 days for normal delivery and 78 days for caesarian delivery for the first four deliveries and miscarriages.
Solo Parent Leave (Rendered at least 1 year of service, whether continuous or broken which includes authorized absences and paid regular holidays)7 Days

Paternity Leave
Employee StatusNo. of Days
Married male for their first 4 children in the same household7 days

Offboarding & Termination

Termination of employees in The Philippines is moderately simple with the employer providing the cause of termination with the appropriate notice period. Severance pay is only applicable for “authorized cause” and employees are entitled to one month of pay for every year worked.

Termination Process

Cause of TerminationDetailsAction
Just cause-Serious misconduct
-Wilful disobedience
-Gross and habitual neglect of duty
-Fraud or breach of trust
-Commission of a crime or offense against the employer, his family or representative
Two-notice rule for notice of intent and notice of dismissal at least 30 days for each process
Authorized cause-Installation of labor-saving devices
-Redundancy
-Retrenchment to prevent losses
-closure and cessation of business
-Disease or illness
Written notice of dismissal to the employee specifying the grounds at least 30 days before the date of termination.

Notice Period

Dependent on the cause as above under “Termination Process”

Severance Pay

Dependent on the cause; “Just cause” is not entitled to severance pay while authorized cause entitles the employee to one month of pay for every year of service.

Probation period

Probation Period in the Philippines is a maximum of 6 months.

Employee Benefits 

Insurance

The country has three main government insurance schemes to which employees and employers are contributing a portion of the monthly wages. Below are the following programs:

  • Social Security System (SSS) - the benefits for this scheme includes sickness, disability, retirement (pension), salary loan and death/funeral cash grants. The contributions for this depends on the salary bracket that the employee belongs to. 
  • PhilHealth - a health insurance program that provides financial aid for employees when availing medical care.
  • Home Development Mutual Fund or PAG-IBIG Fund - a national savings program that provides affordable house loans, calamity loans, multi-purpose loans and security savings. 

Employee Share Option Plan

The Philippine employers may offer stock option plans for their employees either without payment or paid in full price. The former will not be subjected to compensation taxes or Capital gains tax (CGT) while the latter will be considered as capital gains and will be taxed. You may refer to this article for more information on Philippine ESOPs.

VAT

The Standard VAT is projected to trend around 12% in 2022. 

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