
Improve your talent acquisition and retention with employee benefits
Over the last number of years, the world of work has changed dramatically. With increasingly non-linear and fragmented career paths, workers are more exposed to shortfalls in income. At any given point in time, their chances of being unemployed are greater than before, while safety nets have shrunk. However, if employers can utilise this fact, by improving benefits (where appropriate) in the ever increasing battle for talent – both acquisition and retention- they are well placed to have a content, productive workforce.
Trends shaping the working world
New technologies, globalisation, and demographic shifts are driving large-scale changes in the working world. The traditional career model is eroding, mobility across industries and geographies is increasing. This creates flexibility, but less security over employment and income. Meanwhile, traditional social protection frameworks are yet to (or won’t!) adapt to the evolving realities of work. As a result, responsibility for insurance, savings and pensions choices is increasingly falling to individuals themselves, as financial support from traditional sources – including employers and governments – shrinks.
Technological changes and globalisation are widely recognized as a key driver behind changes in labour markets. As capital and labour can move freely across borders and industrial sectors, the displacement of significant parts of value chains, if not entire industries, across borders has become commonplace.
The third trend is related to demographic change reshaping the workforce, and the needs of workers. A combination of increased life expectancy and decreasing birth rates in many countries has contributed to the so-called ‘greying’ of the workforce. Older employees are certainly valuable for the diversity they bring to the workforce. Retaining them is also a way to give older individuals opportunities to retain an active role, and remain engaged in society.
But as public pension and healthcare costs have risen in line with an increase in life expectancies, this is putting pressure on public finances. And it can also foster competition for jobs between old and younger workers, while making it harder for young individuals to plan for the future. Companies, policymakers, and the workforce have all been affected by these changes. To sum up, it is increasingly rare today to stay in one job, or with one company, for decades or even an entire career. Workers are increasingly job-hopping, switching careers, and even moving from country to country.
Four characteristics of a modern workforce
1. Full-time dependent employment for an indefinite time is giving way to new contractual arrangements that give employers more flexibility and – for better and for worse – give workers more flexibility, too. Short-term or temporary contracts are increasingly common. Self-employment is also becoming widespread due to the advent of online platforms, which provide a pool of workers available on demand, virtually anywhere in the world. People often have multiple jobs. All of this is especially significant for younger people, for whom the standard, long-term, permanent-contract type of employment is scarcer.
2. Although new, non-traditional forms of contract offer some advantages in terms workers’ flexibility and autonomy, the instability of such contracts means that certain opportunities and protections are curtailed. Relying on short- or fixed term contracts often triggers feelings of anxiety and vulnerability.
3. Technological advancements also place an imperative on workers to be flexible. To reap the benefits of current labour market changes, individuals will have to adapt: that is, they will have to acquire and maintain new skills throughout their working lives. In some cases, workers might have to compromise when it comes to their contract, or else look for a new job.
4. Related to this, social protection models are increasingly challenged by new working arrangements, which clearly stand outside standard employment frameworks. Non-traditional workers are typically not covered by many of the benefits and protections afforded to permanent employees.
Millennials in the workforce
Interestingly, according to a survey from Zurich in conjunction with Oxford University, millennials were as likely as their older counterparts to save part of their income in 2018, with 63% saying they were able to do so. About a third of them (32%) reported that retirement is their top worry – and this concern was a very close second to the much shorter-term problem of paying their monthly bills (34%).
Contradictory to the above, levels of ownership of term life and income protection insurance for Millennials, as well as their self-reported levels of knowledge about these products, are not high. Highlighting the importance of educating the modern workforce and providing independent financial advice. Millennials is an often overused buzzword, but employers should recognise that this demographic is made up of people aged 21-38, and will be the biggest workforce demographic in the next few years.
Intergenerational attitudes towards technology’s effects on national labour markets are remarkably consistent. While we might expect younger people to be more pessimistic about the impact of technological change on the job situation in their country, there are virtually no global generational gaps here: about 23% of respondents of all ages believe technology has made things worse, compared with around 53% on average who believe it has improved the situation. When it comes to fears about losing their own jobs, millennials and those in the middle of their careers are worried in equal measure: It’s only those who are close to retirement who are noticeably more relaxed.
Trends in the Irish workforce
Job instability is as likely to be voluntary as involuntary. A fifth of our respondents said they think they are likely to lose their job in the next year. Interestingly however, an even greater proportion (27%) say they have plans to leave their job voluntarily within the same time period. Of these, most appear to be readying themselves to become freelancers. And when it comes to opening up other career opportunities, similar numbers say they’d be willing to move abroad for a job.
The Irish economy has seen a decent comeback in recent years, with one consequence being a shift from a pre-crisis economy based primarily on agriculture and construction towards one more based on the tech sector and pharmaceuticals. This also means the recovery is primarily focused in large urban centres. Growth in self-employment and the gig economy (mainly for services) has occurred, but at a fairly modest rate. Nearly half of Irish jobs appear to be impacted to some degree by increased automation, particularly for some lower skilled roles. Fortunately, opportunities for adult education and training remain fairly prevalent in Ireland.
Our social welfare system also provides some protection for workers. The Illness Benefit is intended for those with a short-term illness whereas the Invalidity Pension and Disability Allowance are long-term payments. Apart from the social welfare benefits, high-income earners tend to be relatively well covered: private sector workers have life coverage (which varies by employer and can range from 1x salary up to 4x salary). Certain employers also provide long-term income protection for their employees of up to 75% of their salary, inclusive of state invalidity benefits. It almost goes without saying that the main gaps for pension provision are for private sector workers and the self-employed as opposed to the public sector. We have spoken at length on the auto-enrolment plans and whilst it looks like something will come to fruition soon, it appears that the onus will certainly be on employers and employees going forward to fund for an adequate retirement. With the country’s economic pickup, people’s disposable income has increased, and so have pension and investment product sales. Whilst a huge amount of money is still on deposit rather than being invested into long term savings, some of this must be attributed to the painful experiences of the recession of the recent past.
In conclusion, the workplace is undergoing fundamental change. This obviously impacts workers significantly, but also employers and business owners. The battle for talent is heating up and employers who have a better understanding of what their employees want and need will be at an advantage.
Source; Zurich Life