10 December 2018 - 12:30
A positive sum-game
Corporate welfare improves the well-being of the employees and the productivity of the companies
By corporate welfare we mean the set of initiatives, be they contractual, or even those taken by the employer alone, which strive to increase the well-being of the families of its employees, by differently distributing the remuneration, taking into account monetary benefits, provision of services or both solutions, benefiting from an advantageous taxation.
It is a very broad definition that encompasses a wide range of services and entitlements: from health to care, to education and recreation with discounts, special agreements, promotions and refunds on leisure activities that give workers several options in addition to traditional pay.
Corporate welfare is a win-win game: employees find solutions to new social needs and save on social security contributions and taxes, due to the substantial zeroing of the tax and social security levy that makes it more convenient to use goods and services rather than receive money.
This means increasing the purchasing power of workers, while at the same time improving well-being within the company. In fact, worker satisfaction and the company climate improve, while factors such as turnover and excessive absences decrease, besides increasing the company’s attractiveness vis-à-vis the outside world and the loyalty of its human resources.
Moreover, thanks to tax relief, employers achieve the advantage of obtaining an effective reduction in the cost of labour in view of the social commitment they have undertaken. Moreover, the care of the relationship with people is of primary interest to entrepreneurs and company managers, especially small organisations where contact with workers is direct.
This is the context in general terms. However, the history and the specific social structure of each country have influenced the timing of the spread of corporate welfare, which is now is experiencing a period of great popularity throughout Europe, albeit implemented in different ways depending on the country in which each company does business.
In the Scandinavian countries, where the State is still heavily present and capable of handling most of the needs of individuals and families, a "low incidence" model of corporate welfare has developed that is essentially limited to projects concerning working hours and flexibility. Instead, in the Mediterranean countries, a concept of "high incidence" welfare has become more common, with companies increasingly trying to respond to the growing demand of employees for health care, training and family support.
In France, for example, the demands of trade unions and workers have focused on services such as health care, social security supplements, vocational training, protection and support for the workers' families.
This led to the introduction of the CESU, a voucher co-financed by employers and used to purchase services for individuals and families, the OCIRP, a form of bilateral welfare that focuses on vocational training and the CET, a working-hours account that lets employees choose (for unused holidays/overtime work) between paid suspension of work or payment of an amount/allowance.
An innovative form of private welfare has been introduced in the Netherlands, where the LCSS fund, an individual-membership, non-compulsory fund that is encouraged by lower taxation, lets employees set aside part of their salary so that they can use it during unpaid time off and leaves.
Something similar is found in Germany, through the Langzeitkont which is a property fund that collects a virtual bank of overtime unused holidays that can be paid to the employee as equivalent work suspension time (leave, holidays, etc.), with access to early retirement, or in cash.
In short, corporate welfare improves the well-being of employees and increases the productivity of not only large companies, but of SMEs as well, as revealed by the “2018 Report - SME Welfare Index” promoted by Generali Italia.
There is no shortage of examples in Europe, as there are many possible combinations of services and facilities for purchasing family benefits. Experts in the field claim that companies will increasingly respond to the changing social needs of society, where corporate welfare will be tailored to allow employees to independently design the package of services that suits them best.