Philippine businesses and enterprises are struggling to secure the talent needed to drive their expansion plans, according to a report by professional services firm Marsh Philippines, as candidates grow increasingly selective about whom they work for.

In a statement issued on Monday, Marsh Philippines Workforce and Rewards Practice Leader Sean Darilay said the supply of future-ready talent remains limited, leaving employers under pressure from both sides of the hiring equation.

"Even in a labor market that looks resilient on paper, Philippine employers are finding it harder to secure the talent they need to grow. The pressure is coming from both sides," Mr. Darilay said.

Marsh's 2026 Talent Acquisition Study in the Philippines found that attracting top talent remains the most significant hiring challenge for employers, cited by 78% of participating organizations. Changing candidate expectations followed at 74%, while 69% of organizations pointed to limited talent pools for critical skills as a major obstacle.

The talent squeeze persists even as broader national employment figures indicate macro-level stability, with the Philippine Statistics Authority reporting a 95.1% national employment rate as of June. Because the employment rate measures the share of the labor force holding jobs, that figure translates to an unemployment rate of roughly 4.9% — underscoring how thin the margin is between a stable labor market and the employer-by-employer contest the report describes.

AI Enthusiasm Outpaces Readiness

Four out of five organizations, or 80%, named artificial intelligence (AI) and automation as the opportunity most likely to positively impact talent acquisition over the next three years. Actual enterprise readiness, however, lags significantly behind that corporate enthusiasm: only 23% of organizations described themselves as fully prepared and actively using AI technologies in recruitment, while 43% of respondents have no defined AI governance roles or frameworks.

Current adoption remains concentrated in lower-risk, efficiency-driven tasks, including creating job descriptions (48%), sourcing and engaging candidates (46%), and generating recruitment marketing content (45%).

"AI is clearly viewed as the next frontier in recruitment, but interest is running well ahead of readiness," Mr. Darilay said. "The organizations that will benefit most are those that pair AI adoption with clear governance, so that technology supports hiring decisions rather than replacing the judgment behind them," he added.

Shift Toward Skills-Based Hiring

Companies are increasingly abandoning traditional credentials such as job titles, tenure, and educational pedigree in favor of skills-first evaluation methods. The study showed 52% of organizations identified skills-first hiring and dynamic role definitions as a strategic priority.

The shift is already visible in practice, with 76% of companies updating job descriptions to reflect dynamic skills and 54% building skills- and competency-based interview guides. To support this approach, 72% of organizations currently deploy assessment tools, with functional and technical skills tests the most prevalent at 81%.

Barriers remain, however. 61% of firms cited a lack of integration between assessment tools and core human resources (HR) systems as a major obstacle, while 48% noted insufficient internal expertise to analyze assessment data.

"Many organizations already use assessments, but often as a screening step rather than a strategic tool. Used well, skills-based assessments do more than fill a role," the firm said. "They give employers a more objective, evidence-based view of a candidate's capability, which also helps reduce bias in the hiring process, as well as linking talent insights with the full talent development cycle."

More Than Pay: What Draws Candidates

Securing high-caliber talent in 2026 requires more than competitive compensation. Benefits and perks (61%) and strong employer brand and reputation (61%) tied with salary and compensation (60%) as the primary candidate attraction drivers, closely followed by learning and upskilling opportunities (58%) and career advancement prospects (52%). That near-tie at the top of the rankings — non-monetary factors matching and narrowly outpacing pay — gives concrete form to the candidate selectivity at the heart of the report.

Candidate experience during the recruitment process has also become a competitive differentiator, with 70% of organizations rating it as extremely important. Operational friction persists, however, as 39% of employers reported lengthy hiring processes and 33% cited inadequate post-interview feedback.

"The foundations of talent acquisition remain the same, but the ability to adapt quickly is what now separates organizations that win talent from those that fall behind," Marsh Philippines Chief Executive Officer Paulo T. Garcia said. "Employers that combine a strong employment proposition with a fast, transparent hiring process, skills-based assessment, and a clear approach to AI will be best positioned to attract and retain the talent they need in 2026 and beyond." The shortfalls the survey catalogs across its findings — in AI governance, HR-system integration, and assessment analytics — mark where that readiness work sits for most organizations heading into 2026.

About the Study

The Marsh 2026 Talent Acquisition Study in the Philippines was based on responses from 91 companies representing 93 entities, collected between May and June 2026 across major industries including shared services, manufacturing, high technology, and financial services.

Source: BusinessWorld, reporting by Juliana Chloe A. Gonzales — original article