Healthcare benefits costs rise by 5% across Europe

The cost of providing employee healthcare benefits rose an average of 5% per employee across Europe in 2007, according to a pan-European report.

Despite the rising costs, companies plan to maintain their health and benefit programmes – citing the role these benefits play in attracting and maintaining staff as a key objective.

Business consultancy Mercer surveyed nearly 800 companies across 24 European countries from May to June 2008. Respondents stated that ‘retaining key talent’ was the most important reason for providing health and benefit services.

‘Managing company health risks’ and ‘improving productivity and performance’ were also rated as important.

Steve Clements, principal at Mercer, said: “More than two-thirds of respondents said they would struggle to retain top-performing employees if they did not offer good health benefits. These programmes were particularly valued as a staff attraction tool by companies in emerging Eastern European countries where migration to western economies has produced a scarcity of talent.

“There is also evidence that health benefits often rank as the most highly valued company benefit in those countries where employees perceive national health provision is relatively poor.”

According to the research, European employers are spending an average of 5.3% of their total payroll costs on health benefit provision however, UK firms spend an average of 7%. A third of respondents said they were likely to shift the cost of health plans to employees to offset the increase in expenditure.

In this clip, Rory Cray a partner at employment law firm Pinsent Masons discusses how many employees will sacrifice salary to secure better health benefits.

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