June 5, 2018
Payroll Salary Compensation, Benefits, and Allowances in the Philippines
June 5, 2018
In this episode,Derek discusses about payroll, salary and compensation for workers in the Philippines. Link to where you can download this guide can be found on the show notes.
- Derek points out the disparity between the west and developing countries and also greater disparity between salaries in the Philippines.
- The entry level Administration staff having an entry level Philippine salary could have a difference of 10x to 100x disparity versus western salary.
- He shares that you can find staff through a formal BPO kind of setting or staff leasing or seat leasing and you can even be in Regus or co-working space and hire staff in the Philippines that work for you through some sort of employment structure.
- He discusses one of the factors with the Philippines is that people notice very quickly the complexity in terms of hiring people and the payroll structure and the responsibilities in terms of payroll.
- Early stage outsourcing go through BPOs or go through a platform such as Upwork to hire staff.
- Derek talks about the comprehensive guide to payroll the salary compensation that dives into every aspect of payment the you need to consider if you are starting to employ someone in the Philippines.
- He shares that he posted a free comprehensive salary review list of 20-25 of the top group of professions or roles that is commonly seen within outsourcing in the Philippines.
- There’s about 90% face value saving between a salary in Midwest America and a reasonable salary in Manila.
- Salary savings are really significant and it is important to know how much to pay your people.
- The Philippines is very pro labor.
Derek: Hi and welcome to another Outsource Accelerator Podcast. My name is Derek Gallimore and this episode number 158. So, today it is just me on the podcast. This is a monologue. Today we are talking about the payroll, and salary, and compensation for workers here in the Philippines. There’s a lot to know about salaries in the Philippines they are very different from the salaries at home. And also the structure of the salaries is different and also the spread of professional salaries here is much wider than you would get in your home country. So, a lot to know, as a result, we have created this comprehensive guide and i speak about it in this podcast and of course, give you those links. Now the link to the guide is super long. So, don’t worry about it. I suggest you go to our show notes where all of the links, and all of the information about this will be there. So, as always enjoy. If you want the show notes, if you want the link, then go to outsourceaccelerator.com/158 enjoy.
Derek: This podcast is about the comprehensive guide to payroll salary, compensation, benefits and allowances in the Philippines. As you maybe are aware there’s a huge salary disparity between the west and the Philippines. There’s potentially about a 90% face value saving between a salary maybe in midwest america and a reasonable salary here in Manila. And not only the disparity between the west and developing countries. But there’s also significant and even greater actually disparity between salaries in the Philippines. So, an executive salary might be many more times that than a entry level administration salary here in the Philippines. The spread of salaries is far more significant than you would see in US or UK for example. And partly the reason for that is, and a lot of this is being heralded by the outsourcing industry. But basically the top executive salaries here now, in the Philippines. Because they’re typically within international institutions. They are very similar to western salaries. They kind of bridge the gap between western and Philippine salaries. So, what you find within bigger organizations is you might have the top executives on a near western salary versus the entry level administration staff, which are very much on an entry level Philippine salary. And the difference there could be 10x to 100x effectively. So, huge disparity. Outsourcing takes many different guises. You know, you could be finding staff here in the Philippines, either by going through a formal BPO which is Business Process Outsource kind of setting. You could be doing staff leasing or seat leasing. You could even be in Regus or co-working space and hiring staff in the Philippines that work for you through some sort of employment structure. But out sitting here in the Philippines instead of where you are in the west. And of course there’s endless work from home, remote working, virtual kind of outsourcing roles that are being done here in the Philippines and across the world. So, there’s a huge opportunity to outsource in whatever kind of model fits. So, the salary savings are really significant and it’s important to know how much to pay your people. And a lot of foreign business owners from the UK, US they see face value price. And maybe one of the earliest schoolborn mistakes is saying, “Well, this salary is only $300 a month”, for example let’s say 500, or let’s say 700 US a month. This salary is only 700 US a month. So, it’s not a lot to me I’m gonna pay a thousand or even double it, i can pay 1400 and expecting that you get double the results or you get a huge amount more loyalty or a huge amount more hard work attitude for that. And that commonly, the mistake that a lot of people make when they first come here. The reality is, it’s kind of generally better to stay within common pay scales. The reason for that is that it only gets more complicated to significantly over pay someone really just destroys the market. Specifically if you aren’t looking to mid term or long term but you’re employing people and then you add more people and then everyone else of course, is looking comparisons with the original employees that your brought on. And naturally overtime as you build the team, you have to become more standardized, you have to become more conservative with your pricings otherwise it can just kind of exponentially get out of control. So, it’s about entering the market sensibly. Looking at the market, not being too kind of gun-ho and say “Well this is cheap, so I can double that”, and just with market norms. So how do you do that? We have the comprehensive guide to payroll salary, compensation, benefits, and allowances in the Philippines. This guide with written, it’s about 10,000 words. And it is here to help you with your salary decisions. So, one of the factors with the Philippines that people very quickly notice is the complexity in terms of hiring people and the payroll structure and the responsibilities in terms of payroll. Now, it’s for good reason that a lot of people especially early stage outsourcing, people they go through BPOs or they go through a platform such as Upwork. Now the reason for this is because they actually shield you, the employer or the proxy employer from a huge amount of bureaucratic paperwork and a huge amount of additional cost and complication that is the payroll system here in the Philippines. I don’t want to talk down on the system, it’s a complicated system but it does serve the workers and looks after the workers which is a good thing. But it is complex and is expensive and also expensive for the administration time to manage. So, I would suggest avoiding that and having your, anyone you employ, employed by proxy through one of this platforms, whether it’s staff leasing, whether it’s a platform such as Upwork. And go that route because it will really save you a huge amount of time. But anyway, this guide, the comprehensive guide to payroll salary compensation really dives into every aspect of payment the you need to consider if you are starting to employ someone in the Philippines. It looks at labor laws, it looks at common rest days, it looks at employee termination, attendance, leaves, holidays, things like that. And you must bear in mind that actually, suddenly as a developing nation. The Philippines is very pro labor. It’s relatively, i mean it’s not a social state but in terms of it’s labor laws. It’s actually very protectionist, which again is a great thing because it wanna protect your workforce, your labor force, and you want people to be working in good conditions as possible. So, of course you wanna get to the nitty gritty of salaries as well. So, we have actually posted a comprehensive salary review within this document and we list maybe 20-25 of the top group of professions or roles that is commonly seen within outsourcing in the Philippines. These roles examples are HR manager, Software developer, Software Engineer, IT representative, Team leaders, System Analyst, Assistant Manager, This is just an example of cross section call center agent, various levels of seniority, virtual assistants. We look at all of this roles and we compare going salary here in the Philippines compared to the equivalent Australian salary, compared to the equivalent US salary and the equivalent UK salary. So, it’s a really interesting chart. And i really think that you will be shocked by the savings. Looking at this chart now as I’m reading through. We kind of commonly seen savings between the 80 and 90 percent range. Yes, you’ve heard it right. The salaries, the face value of the salaries that you will save when outsourcing would typically, will commonly be between 80 and 90 percent saving. Now of course there are additional cost, there are office cost but that also applies to staffing in your home country. There are of course different structural costs in the Philippines. People need more of a hierarchy, it’s typically more of a management structure within the hierarchy here. And also, there’s probably more people, more loading of people because of the structures there are available here. So, it does not work out to a 80-90 percent saving but i do think by doing a research and looking at this table in this guide it really is quite eye opening as to the face value savings. So, also within this guide we look at the specific roles, we look at legal considerations, and we also look at things like separation pay, retirement pay and also then employment from within a BPO structure which i mentioned earlier. So, it’s an interesting guide and as always, we are here just to help you along and help educate you with your outsourcing or even considering, just considering outsourcing then I think it’s worth looking at these articles and documents that we provide. As always, well on this website we can give you the URL but it’s a bit of a long one but as always you can read this. All of the information is free, you can download the PDF as well. So it’s all super accessible, you’re welcome to come and have a look. I will tell you the URL, it’s a super long URL. So what I suggest is you go to our show notes and the link will be there of course. But in the meantime I’ll have a go at reading out this URL, i’m not going to spell anything but here it is. So it’s outsourceaccelerator.com/guide/comprehensive-guide-payroll-salary-compensation-benefits-allowances-philippines/. Ok, it’s a super long URL and I do apologize for that. But go to our show notes and you will have this guide here for you. Of course you can just go to our website which is outsourceaccelerator.com and go to the guide section.And of course you can also type in Google Outsource Accelerator and payroll guide or something like that and it will pop up in Google. Thank you for that Google. So that’s all for me. I would love any feedback on this guide. If you wanna any other additions to the guide just let us know and best of luck with your outsourcing journey.
Ok, that was me about salaries and compensation in the Philippines. Hope you enjoy that. Again, don’t worry about the length of the URL. If you want to check out that document. Go to outsourceaccelerator.com/158 and that will be on the show notes. Plus if want to ask us anything, if you wanna leave us any comment then just email us at email@example.com . See you next time.