How Rising Costs and Evolving Workforce Needs are Fueling Flexible Benefits
Key Takeaways
- The convergence of economic pressure and employees’ changing preferences is highlighting the importance of flexible benefits as a strategy for maintaining a competitive employee value proposition (EVP).
- Offering flexible benefits empowers companies to tailor support across a diverse workforce.
- An agile benefits strategy can help organisations manage rising healthcare costs and foster employee wellbeing, which contributes to productivity and financial sustainability.
Workforce and economic trends in Asia are reshaping how organisations approach employee benefits. Changing demographics, rising healthcare costs, and a dynamic labour market are creating an environment where a one-size-fits-all benefits offer no longer adds up for workers or HR budgets. In this context, flexible plans are gaining momentum as organisations look for ways to keep their employee value proposition (EVP) relevant.
Aon’s 2025 Employee Sentiment Study found that 60% of global employees are planning to change jobs within the next 12 months, with the figure rising to 82% in India. At the same time, ‘failure to attract and retain talent’ ranked in the top three risks for Asia Pacific employers in Aon’s 2024 Global Risk Management Survey. With so many employees considering a move, organisations need to create a compelling, personalised benefits offer aligned with individual needs and life stages.
Meeting the Needs of a Diverse and Evolving Workforce
The rich cultural and demographic diversity in Asia demands an approach to employee benefits that is as varied and agile as its workforce. The region is witnessing key trends driven by an ageing and multigenerational workforce. People are retiring at an older age, while Generation Z represents a growing proportion of employees, with 1 billion in this age group expected to enter the workforce by 20301. At the same time, rapid growth in digitisation and AI are fueling demand for more personalisation, which is also playing a role in transforming employee expectations.
Traditional benefits programs often fall short in meeting these varied and evolving needs. Flexible benefits, by contrast, offer more opportunities to personalise support, whether for family planning, career development, or advanced health services. They enable organisations to tailor benefits by career stage, personal priorities, and lifestyle, creating a more inclusive and engaging employee experience. This personalised, adaptive approach not only meets the immediate demands of a varied workforce but also sets the stage for delivering long-term value for employees.
Managing Rising Healthcare Costs
Alongside workforce changes in Asia, rising healthcare expenses and economic uncertainty have emerged as a significant challenge, putting a strain on benefits budgets and employees’ financial wellbeing across the region. Double-digit increases in care costs revealed in Aon’s 2025 Global Medical Trend Rates Report are driving employers to seek more sustainable ways to deliver the support employees expect. In Singapore, where medical services are currently employees’ most valued benefits category, 65% of workers would trade existing benefits for options better suited to their personal needs2.
Flexible benefits provide an important mechanism for reallocating resources toward preventative care, such as regular health screenings or digital health tools. Data and analytics can also ensure appropriate benefits are targeted to employees who need it most.
According to Rice Loh, head of total benefits advisory & management for Aon in Asia, “Advanced models such as Aon’s Health Risk Analyzer can now predict high-cost claimants using machine learning and simulation techniques, empowering employers to proactively mitigate and budget for rising healthcare expenses by leveraging our extensive global database of claims experience”. This more personalised approach allows HR leaders to adapt more rapidly to the evolving needs of a diverse workforce and align benefits accordingly.
A Holistic Approach to Enhancing Wellbeing
Medical benefits are not the only priority for today’s employees. Emotional, social and physical health, and financial security, can all impact workforce wellbeing and employees are struggling and expecting more support from their employer. One in five employees globally report low levels of wellbeing and supporting employee wellbeing ranked as the top employee expectation2. In Hong Kong, mental health concerns are on the rise, with 77% of employees reporting job-related menta health issues and 49% experiencing burnout – more than double the 22% reported the previous year3.
With inflation and cost-of-living pressure continuing across the region, financial resilience is another important pillar for employee wellbeing. According to the 2023 Aon and TELUS Health Asia Mental Health Index a lack of emergency savings is a serious issue for employees, with 34% of employees saying they would not have funds available to cover unforeseen expenses. This number rises to almost half of employees in The Philippines (48%).
Flexible benefit programs can help meet expectations and mitigate the negative impacts of financial wellbeing and mental health issues by enabling employees to self-select from a range of tools, services and resources for stress management and financial wellness.
Flexibility as a Driver of Growth and Competitive Advantage
As organisations across Asia continue to navigate a complex and rapidly changing environment, the ability to deliver flexible benefits will be critical for building a healthy, happy workforce and a competitive EVP. While organisations adopting flexible benefits are currently in the minority, ongoing demand for talent could see the balance shift.
Only 41% of employees are able to customise their benefits today, yet 72% believe this is important2.
The ability to respond rapidly to changing demand for benefits not only demonstrates that an organisation understands its workforce. It also signals that they are prepared to invest in them. As flexible benefits become more widespread, organisations that lag behind may struggle to keep up with employee expectations.
“Flexible benefits are not simply about offering more choice—they’re about creating a system that can shift and scale with employees’ changing needs and the organisation’s financial realities.”
Rice Loh, Head of total benefits advisory & management, Asia
“In times of uncertainty, this adaptability becomes a strategic advantage. Whether responding to a sudden rise in healthcare costs, supply chain interruptions or a generational shift in workforce priorities, flexible benefits provide the levers to adjust quickly and effectively,” says Loh.
By investing in flexible, tailored solutions, organisations are not only meeting today’s challenges but also building a foundation for future growth and success. This strategy relies on continuous assessment of benefits offered and data-driven insights, ensuring benefits remain relevant as new trends emerge, and as market conditions shift.
Contact us to discuss how the team at Aon can help to improve your organisation’s benefits strategy, or visit our web page to learn more about flexible benefits.
1 World Economic Forum, 3 ways to make the future of work for Generation Z, 20 January, 2025
2 Aon 2025 Employee Sentiment Survey
3 AXA 2024 Mind Health Report