Climbing benefits costs top concern of APAC businesses – Aon

Climbing benefits costs top concern of APAC businesses – Aon | Insurance Business Asia

Climbing benefits costs top concern of APAC businesses – Aon

The rising cost of employee benefits is the leading concern for businesses in Asia-Pacific, according to a report by global brokerage and professional services firm Aon.

Aon recently published its 2022 Asia Pacific Employee Benefit Trends Report, which examines the changing expectations of employees and the trends in employee benefit strategies in the region. The report found that 55% of employers consider the increasing cost of benefit plans as their top challenge, followed by 54% identifying the unavailability of benefit packages that offer diversity, options, and flexibility to attract and retain talent.

The COVID-19 pandemic has triggered a rapid and significant change in employee expectations in the region. Employees now increasingly seek a work environment that supports their mental health and wellbeing, with more employees asking for remote work arrangements, meaningful work and shorter hours. Employers are gradually recognising this trend, with 35% of those surveyed reporting that one in four of their employees may work remotely in future.

While employee wellbeing was a key priority for 46% of surveyed employers, one in two companies indicated that they lacked a clear benefits philosophy and that having a mid- and long-term benefits strategy was a key future priority for them. One in five companies said they did not review their benefit offerings on a regular basis.

"Employers in the region need to recognise the shift in employee work motivations resulting from COVID-19 and rethink their benefits strategy,” said Tim Dwyer, chief executive officer of health solutions for Asia-Pacific at Aon. “To ensure they build a resilient workforce that can thrive during times of ongoing change and complexity, employers must leverage available anonymised and aggregated data insights around health and wellbeing, alongside employee feedback to gain insight into needs and expectations. These insights can inform decisions on how to manage the evolving structure of work or more specific solutions, such as ways to achieve a healthier and more inclusive team. Apart from the diversity and flexibility of benefits, there is a need to communicate the benefits employees receive more clearly.”

The study said that talent attraction and retention is key for organisations, with 28% reporting an increase in turnover of more than 5% in 2022. In the face of rising inflation and skill shortages, employers are offering holistic compensation packages, including benefits to attract and retain people with the right skills. However, 41% of employers reported that their benefits were not sufficient to fulfil employees' needs, and 45% found that their benefits were perceived as “below market”.

One out of three employers said they plan to implement flexible options or a choice programme in the near future, using digital tools and voluntary benefits. The markets where the most employers are implementing a flexible benefits programme are the Philippines, India, China, Singapore, Malaysia, and Hong Kong.

Despite many employers offering improved benefits, there is a gap in communicating these benefits to employees. A majority (57%) of employers said their employees were not fully aware of the benefits provided by the organisation, even though three in four employers communicated benefits through email and 41% used a digital benefits platform. Aon noted that there is a trend for employers to move toward providing a “digital benefits home hub”, as an access point for all things benefits.

“A clear benefits and communication strategy will help businesses make better workforce decisions based on employee health and wellbeing data, talent attraction and retention outcomes, benefits spend and business performance – and ensure all elements are aligned to build a resilient workforce,” said Simon Thompson, practice leader for health solutions for Asia-Pacific at Aon.