SME vs Corporate: Who Pays More?
Salaries are a fundamental aspect of any job. They play a significant role in attracting and retaining talent. In the Philippines, where diverse businesses thrive, employers must especially understand the salary landscape in the context of their company structure.
Drawing insights from the JobStreet Salary Guide 2023, this article explores the salary differences between small and medium-sized enterprises (SMEs) and corporate organizations in the Philippines. It also sheds light on the factors that influence these disparities.
SME salaries in the Philippines
The Philippine government classifies SMEs by asset size (up to ₱100 million) and number of employees (up to 199). They acknowledge SMEs as the nation’s economic backbone, creating jobs, stimulating growth, and helping businesses. In fact, SMEs provide livelihoods for over 63% of the Filipino workforce. However, the JobStreet Salary Guide 2023 shows a significant salary gap between SMEs and corporate organizations.
Base salaries in SMEs
In SMEs, base salaries tend to be more modest than those in corporate organizations. Small businesses often operate with limited resources. As a result, the base salary for similar positions may be lower than what one might find in a corporate setting.
Nevertheless, salary dynamics vary across sectors. SMEs can outshine corporate organizations in specific industries when offering attractive compensation packages. For example, SMEs operating within the Computer & IT industry often attract top-tier talent with competitive remuneration.
Types of pay structures in SMEs
SMEs also commonly employ various types of pay structures, including hourly wages, project-based payments, or performance bonuses. This flexible approach allows them to adapt to the specific needs of their business and employees.
Salaries in corporate organizations
Corporate organizations, which include larger companies and multinational corporations, often have a more structured approach to salaries and compensation.
Base salaries in corporate organizations
In corporate organizations, base salaries tend to be higher than those in SMEs. This is primarily due to the larger resources available to these organizations and the standardized compensation packages they offer.
Types of pay structures in corporate organizations
Corporate organizations typically follow a fixed salary structure, including regular salary increases and additional benefits such as health insurance, retirement plans, and stock options. These comprehensive compensation packages are designed to attract and retain top talent.
Factors influencing salary differences
Several factors contribute to the differences in salaries between SMEs and corporate organizations in the Philippines:
Company size: The most apparent factor is the size of the company. Larger corporations can afford to pay higher salaries due to their greater financial resources.
Industry: The industry in which a business operates can significantly impact salary levels. Industries with high demand for specialized skills, such as information technology or finance, often offer more competitive salaries.
Location: Salaries can vary depending on the geographic location of the business. In the Philippines, metropolitan areas like Metro Manila generally offer higher salaries than rural regions.
Experience and qualifications: Individual qualifications and experience play a crucial role in determining salaries. Skilled professionals with relevant expertise often command higher compensation.
Highest paid industries in the Philippines
In high-demand sectors like Computer & IT, Consulting, Call Center/BPO, Insurance, and Human Resources, businesses must be prepared to offer competitive salaries to secure the best talent and maintain their competitive edge.
Computer/IT, Consulting, and Call Center/BPO are industries with a high demand and a talent shortage. With this, they are among the highest-paid industries in the Philippines. Productivity and global opportunities also boost salaries. As the digital economy grows and outsourcing increases, these fields remain among the most lucrative for Filipino talent.
In SMEs, Admin/Human Resources and Sales/Marketing are also well-paying fields. These roles are crucial regardless of business type. Admin/Human Resources manages staff, while Sales/Marketing boosts business by selling products and services.
Surprisingly, supervisors and managers in SMEs in Building/Construction can earn more than those in corporations. This can be attributed to several factors, including leaner hierarchies, direct profit sharing, and a hands-on, fast-paced work environment. Moreover, skill shortages in the construction field drive up salaries, making SMEs an attractive choice for experienced professionals.
Even if your business falls outside these high-paying sectors, there are strategies to attract and retain top talent. Consider offering competitive salaries and benefits, investing in training and development programs, providing flexible work arrangements, and cultivating a positive and supportive work environment.
Highest paid specializations in the Philippines
Salary trends in the Philippines reveal clear patterns for SMEs and corporations in specific job fields.
The Computer & IT sector usually has the highest salaries because of the significant need for IT experts nationwide.
The Building/Construction sector also pays well because of the growing economy and numerous infrastructure projects in the Philippines.
The Services field is lucrative in SMEs. Regardless of size, many businesses require services like customer service, accounting, and human resources.
Interestingly, certain job specializations show salary differences between small companies and large corporations. For example, Marketing & Advertising and Healthcare professions maintain similar salaries in both settings. Meanwhile, the Insurance sector offers more competitive pay in SMEs.
Supervisors in call centers and BPO sectors often earn higher salaries in SMEs than their counterparts in corporations. SMEs usually have simpler structures with fewer layers of management, which means more direct distribution of profits. This work also requires quick decision-making and increased responsibilities for supervisors in SMEs.
Employers in fields like Computer & IT, building/construction, and education/training should be prepared for higher salary expenses due to the strong demand for skilled workers in these sectors.
Top industries at risk of automation
In the Philippines, certain industries face higher risks, impacting both SMEs and corporations. For SMEs, the at-risk sectors include Insurance, Construction & Building, and Marketing & Advertising.
Insurance is sensitive to economic fluctuations. When the economy is strong, more people buy insurance, but during economic downturns, fewer do.
Construction & Building demands substantial capital. SMEs may face stiff competition from well-funded corporations.
The Marketing & Advertising industry is highly competitive, as there are several SMEs in this field. The competiton can strain SME budgets due to high costs.
Meanwhile, corporations encounter risks in Hospitality, Transportation, and Electrical/Electronics industries.
Hospitality’s fortunes are closely tied to the economy. People travel and dine out more during good economic times, but less during downturns.
The Transportation sector grapples with extensive regulations. The industry demands costly compliance with government rules. Plus, it faces competition from alternatives like ride-hailing services.
Electrical/Electronics corporations must continually invest in technology to stay competitive, contending with increased foreign competition.
Top specializations at risk of automation
Jobs in Admin/Human Resources and Manufacturing are at risk of automation in SMEs and corporations.
Admin/Human Resources often involve repetitive tasks that computers can do. These include data entry, record-keeping, payroll processing, and managing employee benefits.
In small businesses, Engineering jobs might have some tasks done by machines, but humans will still be needed for important decisions and creative work.
In Manufacturing, robots might take care of repetitive tasks on the production line to make things faster.
Some jobs will always need humans for things like making decisions, being creative, and working with others. As technology improves, there will be chances to learn new skills and move into more complex roles.
Various factors influence salary differences between SMEs and corporate organizations in the Philippines. These include company size, industry, location, and individual qualifications.
While SMEs may offer lower base salaries, they often compensate with flexible pay structures and opportunities for growth. Corporate organizations, on the other hand, provide more structured and comprehensive compensation packages.
As you navigate the Philippines’ job market, you must recognize these salary differences. Offering attractive salaries and fostering a positive work environment remains key to attracting and retaining the best talent.