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The Time to Act Is Now
As employers worry over the impact of Brexit on their workforce retention rates, Thomas Lam of Axco advocates employers adopting a holistic approach. A robust flexible employee benefits scheme would include traditional insurance benefits, prevention wellness services, wealth planning and non-core benefits.
UK employers are facing fresh challenges posed by the Brexit phenomenon and it is imperative that employers take a proactive approach to retaining well qualified and skilled employees.
The importance of overseas employees to the UK workforce, which currently addresses skill shortages in sectors such as engineering, tech, healthcare and finance, is a primary concern. There is substantial evidence to suggest that the UK is at risk of a so-called "brain drain", where skilled workers depart the country. As of September 2017, overseas nationals accounted for one in ten employees, with EU nationals making up 7.4% of the UK workforce and non-UK nationals from outside the EU making up 3.8%.
On closer examination, it is revealing that EU citizens from western European countries and non-EU nationals are more likely to be working in highly skilled and professional roles compared to UK nationals. By contrast, eastern Europeans make up a sizeable percentage of middle-skilled employees. Although a recent KMPG survey, suggests young, talented and higher paid EU nationals are more likely to consider greener pastures outside the UK, almost half of EU nationals altogether are planning to or considering leaving the UK, which will be a serious blow to the economy.
Around three-quarters of HR professionals are experiencing difficulties recruiting skilled and technical employees. This is exacerbated by rising emigration levels across all nationalities including UK citizens, and a complicated work visa sponsorship system which is often characterised as restrictive, tedious and costly. Mix in a health surcharge of GBP 200 per year per person applied to all non-EU nationals and their dependents, and the UK is further diluting its attractiveness as a working destination. There is also a real danger of in-demand employees being drawn away by international or multinational firms. Over the next several years it is obvious employers will no longer be able to rely on overseas employees to plug their skills gaps.
Employers must, therefore, focus their attention and resources on developing home-grown talent, and create a positive working environment for both UK and non-UK nationals alike. Non-UK EU nationals have placed a greater emphasis on a welcoming work culture and want a clear commitment by employers that they are valued. Employee retention is key to meeting long-term corporate objectives.
One positive solution to addressing these concerns of employees is the provision of a comprehensive, flexible benefits scheme. Also known as cafeteria plans, these schemes provide employees with the flexibility to customise their remuneration and benefits package to employee demands, whilst addressing the employer's concerns for a cost-effective retention tool. Surprisingly, however, approximately 60% of surveyed employers have yet to establish a flexible benefits scheme.
Multinationals and leading local employers in the UK are mainly focused on the provision of traditional employee benefits; 90% of employers provide life insurance, 80% of employers provide sickness benefits and 70% provide income protection. It is worth emphasising that less than 10% of UK firms provide allowances to address the employee's health and wellbeing. According to the Health and Safety Executive, the number of working days lost per year amount to 12.5 million related to stress and depression, and 8.9 million related to anxiety and musculoskeletal disorders. Prevention wellness services can include items such as gym membership, health screening and counselling for mental health, and as the proverb goes, prevention is better than cure.
Another area often overlooked by employers which could have a profound impact on retention is the employee's wealth planning. With average UK wage growth (2.2% as of September 2017) failing to keep up with raising CPI (3.1% as of November 2017), financial stress can potentially lead to reduced productivity and performance, staff absences or breakdown of work relationships. Incorporating financial planning or education within flexible benefits schemes opens the opportunity for employees to seek advice on retirement, mortgage or debt management, taxation, adequate insurance cover, long-term investments and social security entitlements. Unfortunately, less than 10% of surveyed UK firms provide this level of additional financial support.
Finally, it is essential that employers communicate the value of their flexible benefits schemes. A lack of understanding of the role employee benefits play in terms of a work-life balance can lead to disenchanted employees. Emails or leaflets may cover the basics and technical detail of the scheme, but employees are normally better informed through other platforms, such as seminars, social media or face-to-face interaction. The freedom to consult HR relating to technical details enhances the employer's communication style and reputation. A well-informed workforce is a happily engaged workforce.