How Much Does it Cost to Hire Workers from the Philippines?

Hiring VAs from the Phillippines helped us reduce costs while effectively growing our team.

But what exactly are we talking about when we say “cut costs?” How much cost are we cutting, here?

The reality is, outsourcing some work to workers in the Philippines could save your business thousands.

Key Takeaways

• The average monthly salary of a worker in the Philippines is 44,800 PHP (US$ 798.76)
• The average monthly salary of an independent contractor in the Philippines is ₱40,000 (~$700), with the annual salary sitting at ₱ 308,578 (~$5,400).
• When hiring a Filipino worker, you’ll need to factor in things like recruiting fees, taxes, mandatory benefits, and conversion rates.

Hiring Costs Associated with Remote Filipino Workers

Before we even get to salaries, you will need to factor in a few different things on top of base pay.

Here are a few of the costs associated with hiring remote Filipino workers:

Recruiting

Consider how much it costs to find a Filipino worker in the first place.

You will likely have to use a recruiting service or save money by direct hiring through a freelancing site like OnlineJobs.ph (check out our review!).

Depending on whether you go the freelancing platform route or hire a recruiting team, you can expect to pay up to around 25% of the employee’s annual gross salary, though EOR (Employer of Record) fees are often around just $100.

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Salary and Benefits

Once you have an employee (not contractor) from the Philippines, you’ll need to pay their salary and an additional cost to cover the mandatory benefits that are afforded to them.

We’ll get more into salary costs for remote employees in the Philippines later, but there are some base additional expenses that factor into the total cost of hiring a Filipino employee.

These are the benefits required by law, per Emerhub:

• 13th Month Pay – a one-time payment that you must pay in December equivalent to 1/12th of the employee’s annual salary.
• Annual Leave – a minimum of five days annually, although many companies offer more.
• Maternity Leave – 100% pay for 105 days.
• Paternity Leave – 7 days with pay for married employees
• Social Security Employer Share – from $10.30 USD up to $63.10 USD.

Aside from these benefits, you will, of course, also have to pay certain taxes on top of the base salary.

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Taxes

The Philippines has different tax rates than the U.S.

You will have to pay these employer taxes no matter what, whether you use an EOR or set up an entity in the country.

• Social Security – employers contribute 9.5% of each employee’s monthly salary to the Social Security System (SSS), which supports sick or disabled employees and retired citizens.
• Payroll tax – 1.16 – 1.19% per month, deducted from the gross salary of the employee.
• HDMF & PhilHealth – you as the employer will also make small contributions to the Home Development Mutual Fund (HDMF), which provides citizens access to loans and housing, as well as PhilHealth, which is the Philippines’ public health system.

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Administrative Costs

The biggest consideration with administrative costs is that, while negotiations and discussions surrounding pay are usually in U.S. dollars, they’re almost always paid out in Philippine Pesos. So things like transaction fees, conversion rates, and banking costs will be a factor.

These administrative costs will usually be covered or included in the cost of hiring an EOR.

Salary Costs for Remote Employees in the Philippines

With all of that out of the way, how much does it actually cost to hire a remote employee in the Philippines?

Starting with minimum wage laws, the minimum wage varies widely based on the region you’re hiring from and the type of job you’re hiring for.

The National Capital Region (NCR) has the highest minimum wage at ₱573–₱610 (~$10) per day.

The minimum wage in Metro Manila is ₱570 (~$10) per day for non-agricultural workers, while in the Caraga Region, it is ₱385 (~$6.50) per day.

In Northern Mindanao, the minimum wage is ₱423–₱438 (~$7.50) per day for non-agricultural workers and is ₱411–₱426 (~$7) per day for agriculture. In Central Visayas, the minimum wage for non-agricultural workers is ₱430 (~$7.50), and for workers in agriculture and non-agricultural businesses with less than 10 workers, it is ₱425 (~$7.50).

The overall average monthly salary is 44,800 PHP (US$ 798.76).

Here are some average salary rates for different jobs in the Philippines:

• Accounting, admin, HR– ₱ 442,387 (~$7,700) annually
• Architecture/creative arts– ₱ 410,000 (~$7,100) annually
• IT/ programming– ₱ 1,174,437 (~$20,500) annually
• Virtual assistant– ₱ 20,000 to ₱ 28,000 (~$350 – $480) per month
• Manufacturing– ₱ 570 (~$10) per day​ for general factory workers, ₱ 20,000 to ₱ 25,000 (~$350 – $430) per month for production workers
• Customer service– ₱249,327 (~$4,300) annually

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Independent Contractor

Since independent contractor rates vary so widely, it’s hard to pin down exactly what they are.

The average monthly salary of an independent contractor in the Philippines is around ₱40,000 (~$700), with the annual salary sitting at ₱ 308,578 (~$5,400).

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Mandatory Benefits and Contributions

If you hire Filipino employees, you must pay a certain amount for their government’s mandatory taxes and benefit systems.

A few of these required costs include:

• 9.5% of an employee's monthly salary credit (MSC) to the Social Security System (SSS) (employee contributes the remaining 4.5%)
• 5% of the employee’s monthly salary for PhilHealth
• 2% of the employee’s monthly salary to the Pag-IBIG Fund (aka The Home Development Mutual Fund (HDMF)
• Payroll tax – 1.16 – 1.19% per month, deducted from the gross salary of the employee.

You must also pay a mandatory 13th-month pay in December, which is a one-time payment equivalent to 1/12th of the employee’s annual salary.

Last but not least, Filipino workers are entitled to Maternity Leave – 100% pay for 105 days for maternity leave and 7 days with pay for paternity leave for married employees.

Conclusion

Hiring Filipino workers as employees or contractors is a good way to get work done with a limited budget, but it does come with a few considerations.

The average monthly salary of a worker in the Philippines range is 44,800 PHP (US$ 798.76). A contractor makes about ₱40,000 (~$700), with an annual salary sitting at ₱ 308,578 (~$5,400).

You’ll need to factor in things like recruiting fees, taxes, mandatory benefits, and conversion rates.

Ready to bring on Filipino talent? Head to OnlineJobs.ph today!

• Avoid OnlineJobs scams

Frequently Asked Questions

How much do Filipino independent contractors charge?

Though Filipino independent contractors charge a very different price depending on their specialty and position, the average monthly salary of an independent contractor in the Philippines is ₱40,000, with the annual salary sitting at ₱ 308,578.

How much is the recruitment fee in the Philippines?

A recruitment fee in the Philippines can cost as much as 25% of an employee’s average salary.

What are the salary expectations of a Filipino worker?

Filipino workers earn and expect 44,800 PHP (US$ 798.76) monthly salary.

What is the average salary in the Philippines in dollars?

The average monthly salary in the Philippines is around $800 USD per month.