In this article No change to benefits strategy Rising healthcare costs are no deterrent Benefits practices Benefits viewed as an entitlement 2011 Benefits Survey & Insights Contact us

The 2008 global financial crisis has left most industries struggling to regain profitability, reduce costs, and realign their talent to maximize productivity. Although the world economy has shown signs of growth with Asia leading the pack, the economic future still remains uncertain. There are rising concerns that the economy is at risk of slipping into a "double-dip" recession. It is more critical than ever that companies assiduously monitor and adjust their course to navigate successfully through continuing rapid changes. Organizations are cautious and are taking measures to steer a successful course through encroaching business risks and challenges.

The results from Aon Hewitt's 2010 APAC Technology Benefits Survey & Insights (with more than 50 technology companies participating across 13 countries in APAC) have provided some thoughtful insights into how organizations are reacting to risks and challenges within the region by the way they shape and manage their benefits programs. Some of the survey findings are surprisingly contrary to rational thought.

1. Benefits strategy didn’t change during the downturn

From the strategy standpoint, the survey findings reveal that the economic recession did not result in participating companies altering their employee benefits packages and strategy. Most participating companies indicated that their strategy is to target 50th percentile of the market practice. Many companies are also exploring ways to improve their employee communication strategy, including providing a Total Rewards Statement.

2. Rising healthcare costs are no deterrent for companies

In an economic recession and with rising healthcare costs (participating companies expressed that sustainable healthcare funding is one of their primary concerns), companies would be expected to react by cutting costs in their risk benefit programs. One way to cut benefit costs is to introduce employee cost sharing. Surprisingly, however, the survey reveals that it remains uncommon for employees to contribute to the cost of their own benefits coverage.

What the survey also reveals is that companies are providing more benefits, as benefit levels in recent years have actually increased. For example, term life and accident, death and disability (AD&D) benefits have increased from 24 times to 36 times salary in countries such as China, Hong Kong, Indonesia, and Singapore. Inpatient medical has also increased, as participating companies now generally provide one-bed hospital wards. There is also an emerging prevalence of providing long-term income replacement benefits in countries such as Australia and Japan.

3. Practices related to retirement, medical portability, wellness and flexible benefits

For retirement plans, there have been no major design changes beyond those driven by changes in local legislation. However, an aging workforce is still a concern. For example, medical portability has garnered increased interest due to the ageing workforce in many Asian countries. Surprisingly, across Asia Pacific, only Hong Kong's group insurance markets support such types of programs. A similar slowness to adapt also is reflected in wellness and flex benefits. Companies have been slow to adopt wellness programs. Even though many high tech companies express increasing interest in wellness initiatives and flexible benefits spending, our survey shows that high tech companies generally do not have wellness programs beyond health screening. Moreover, less than 10% of participating companies offer any form of flexible benefits.

4. Benefits viewed as an entitlement

The survey reveals interesting details about the Asia Pacific region from a cultural standpoint. Participating companies have expressed that employees commonly perceive benefits as an entitlement rather than as a part of their total employment value proposition. With the region's paternalistic culture, such benefits as congratulatory leave or allowances (for such events as births and graduations) and education programs for employees’ own advancement or for their children are quite common.

2011 APAC Benefits Survey & Insights – Technology Industry

For 2011, the focus for Aon Hewitt's APAC Technology Benefits Survey will be on the impact of the recovering economy on organizations' talent and retention strategies as well as a review of wellness initiatives. It will be worthwhile to see what conclusions (and unexpected surprises) emerge from analysis of this forthcoming data.

Contact Us

For enquiries about the Survey, please visit our website at www.aon.com/apacinsights. Alternatively, you can contact any of the following consultants: