A survey by Mercer Marsh indicates that the region is likely to see an increased prevalence of Flexible Benefits progammes for employees in the near future.
The study undertaken by the human resources consultancy revealed that a third (33%) of respondents from the Middle East planned to implement a programme to provide employees with more benefits choices in the next two years. The company says that this is likely to become a trend in a region where employees have traditionally had little or no choice in their workplace employee benefits.
“This survey shows that although what constitutes employee choice varies significantly by country, benefits flexibility seems to be gaining favour with employers and employees alike as both seek to obtain maximum value from the benefits package,” said Stephen Clements, Employee Health & Benefits Leader for the Middle East at Mercer.
“The Middle East market conditions now appear to be right for the adoption of more flexible benefits; diverse workforces, a desire to differentiate and expand benefits offerings, and high benefits cost inflation. More and more companies in other regions are experiencing the virtues of offering employees a choice of benefits and seeing the potential long term cost savings to the company,” he added.
The information from the 2014 EMEA Employee Choice and Benefits survey examines the role that employee choice plays in organisations’ group benefits programmes, analysing responses from 636 employers across 17 countries. For the first time, Middle East based employers played a leading role in the survey with 54 (8.5%) participants from the region. Middle East participants were mainly based in either the UAE (46%) or Saudi Arabia (51%). The information in the survey allows companies to benchmark their benefits programme against other organisations as well as understand the role of employee choice and flexible benefits.
Middle East survey participants indicated that around the majority (69%) do not offer any benefits choice at all to their employees currently and those that do offer choice tend to do so through voluntary benefits add-ons (19%). This suggests that the Middle East is lagging significantly behind the wider EMEA region in offering employee choice in benefits, and in particular Western Europe where more than half (53%) now do so.
The survey also indicates that employees respond positively to being offered more flexibility. Overall, employees who have been given benefits choices are more satisfied with their benefits choice programmes, with three quarters (76%) of respondents reporting a positive employee response to a flexible benefits programme’s introduction.
For employers, a more flexible benefits approach is all about better meeting the needs of their employees, and in so doing becoming an employer of choice with happier more motivated employees. “Remaining competitive in the market place” is cited as the most significant driver for offering choice in employee benefits (56%) followed by “improving employee engagement” (55%) and “retaining employees” (54%). Financial drivers appear to be less important: “Reducing/controlling company contribution to cost of benefits” was cited by 11% of respondents, although, having said that, 43% of respondents said that their overall benefits cost were lower after having introduced flexible benefits with a further 23% saying it was cost neutral.
Those employers who have already started offering more employee choice report that they have achieved their goals. 72% of companies reported that, overall, their employee choice programme has met organisational objectives.
“The Middle East has not seen the same prevalence of flexible benefits thus far. This is likely due to the absence of tax incentives to provide benefits through salary sacrifice in this part of the world, and also a perception that providers in the market are not ready for flexible benefits. However with some early adopters already having implemented flexible benefits in the region, this survey indicates that many other employers are set to follow the trend,” added Clements.
“We can see from the responses that the vast majority of employers say that offering choice is helping them meet their organisational objectives. Likewise, they report that their employees have responded positively to benefits choice. So it really is a win-win and there is now a momentum behind more employers moving in this direction in the near future. Our expectation is that this trend will continue to accelerate. Being better able to meet the diverse needs of the Middle East workforce is going to become a key weapon as the war for talent hots up again,” he added.