What is taken for granted in one country may not be provided by the state in another, and one important role employers play is to support staff by filling in the gaps in the local state employee benefit provisions.
The most well-known example, and one of the most costly ones for a multinational employer, is a retirement benefit; in many countries, the state provision is limited to a level sufficient to avoid serious poverty, but is hardly enough to finance a reasonable lifestyle for many employees. Thus, in the UK and many other countries, employers have historically provided pension plans to supplement the state provision.
In countries where the state provision is regarded as sufficient, for example, in Italy, where the state scheme is a defined contribution (DC) arrangement with contributions of 33% of an employee’s salary, employers have historically been less involved and supplementation has largely been the responsibility of the individual employee, although this has changed significantly in recent years.
Other examples include supplementary medical benefits to complement the public healthcare system, either to allow access to alternative care in private hospitals, help staff avoid long waiting times for specialist doctors, or to provide upgraded care, such as a better standard of overnight accommodation in a public hospital. In extreme cases, such as in the US or the developing world, where there is no satisfactory public healthcare system for most employees, employer-provided medical benefits are comprehensive, and expensive by international standards.
There is a recent trend among large multinationals to implement global minimum standards in some areas, particularly in the case of benefits on death and disability as well as maternity and paternity leave. So, for example, an organisation might set a global minimum of two years’ salary in the event of death, regardless of local market practice or state provision.
Overall, it is important for employers to understand the local environment and what others in the country provide, and then assess whether they want to align with that market practice, or perhaps include a global minimum corporate standard, as well as whether they want to introduce flexibility in benefit provision so individual employees can choose the benefits that best suit their needs.
Tim Reay is treasurer at the International Employee Benefits Association (IEBA)
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