Factors such as age, lifestyle and experience make it difficult to analyse whether employees want more net pay or better benefits, but one thing is certain, there is no one size fits all solution.
What has become evident is that millennials are redefining employee benefits and that employers must find ways to adapt.
Millennials are a growing sector of the workforce, and so employers need to consider how their benefit or remuneration structure should change to attract and retain talent. Younger people may prefer to look for benefits which they can personally manage, as they are technologically better skilled. The trend is to want higher net pay with fewer “built in” benefits. On the other hand, for the older generation it may be different, they might prefer more security with benefits, in the form of health care and retirement fund savings.
The labour force may also look for more net pay, as they are already battling to make ends meet. Over 55% of South Africa’s population currently live below the poverty line, and in such cases taking care of immediate needs overrules things like saving for retirement.
Higher paid employees will most likely favor better benefits as they already have enough money to take care of the necessities.
The role of the economy in employees’ preferences
Things like economic downgrading, unemployment and retrenchment threats play an important part in the decisions made by employees. South Africans are financially stressed, and when people have less money, things like retirement and healthcare will take a backseat, and left to be worried about at a later stage.
The basic cost of living in South Africa is estimated to be at R5 544 a month, and with the proposed minimum wage of R3 500 per month, employees will still be struggling to get by, leaving no possible room for saving for their old age.
The most important benefits
Benefits, rather than salary taken in isolation, are a better predictor of employees enjoying their jobs. Employers strive to attract, retain and motivate a skilled, high performance workforce. If an employee is in the position to negotiate better benefits, the most important ones to look out for are retirement, risk and healthcare benefits.
When considering healthcare benefits, flexibility in choice is key. Employees should be able to choose their plan to suit their and their family’s needs.
When looking at retirement benefits, it is important to have a risk component included as part of a retirement fund scheme. The way to go would be umbrella funds with flexible options as every employee has a different need depending on where they are in their life. The cost of disability and life cover benefits can be very cost effective in a Group Scheme, rather than if taken in a personal capacity. Choice, flexibility and equity is key in the benefits model offer so that employees can make choices depending on their needs that are constantly changing.
Employers must remain relevant to their employee benefit offering.
The employer’s role in assisting employees to make better financial decisions
Employers should provide financial education to employees to assist them in making the right choices for their future. A responsible employer will offer compulsory savings in the form of a retirement fund and basic health care benefits. Enforced payroll deductions as part of an employment package are often the only way employees are encouraged to save or to mitigate risks. It is argued that you are less likely to miss money already subtracted than money you are expected to save after paying all your monthly expenses. employers need to remember that even if it is an employees preference to have a higher net pay with less benefits, should trouble strike the employee they will look first to the employer for a “bail out”, and assuming the employer needs the employee back at work, they will be left footing the bill.
In the end it is very much up to the individual’s needs when deciding between better benefits and higher net pay, and no employer should force their employees into either direction.
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, email@example.com, www.atthatpoint.co.za
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