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Global reward management unlikely to get any easier in 2020

System og strategi for kompensasjon
Beyond Data

By Darryl Davis | January 8, 2020

Successfully designing, managing and reviewing global reward programs represents a delicate balance at the best of times.

Perhaps the biggest single issue with reward markets is that they never stop changing.

In times of uncertainty when employers become increasingly cost-conscious and wary of change, navigating markets can be akin to crossing a minefield. Willis Towers Watson’s 2019-2020 Global 50 Remuneration Planning Report - drawing upon a host of proprietary research and survey reports – providers readers you with a map to help guide them you through with key facts, figures and insights.

Naturally, employers are mindful of salary increases as they represent a potential chain reaction of employment cost increases which may also be defined as a factor of base pay. In some markets, perhaps most formidable of all are the statutory and mandatory employer taxes and contributions on wages (in addition to any voluntary benefit programs which may be in place). In this regard, markets are incredibly diverse. Assuming an employee was paid the equivalent of USD 50,000, employers could expect to pay anywhere from one cent for every dollar paid to staff in South Africa to nearly 45 cents in France.

30%
Argentina’s salary budget rise in 2020

Well-designed reward policies can offer a win-win deal, helping employees maximize tax breaks and their net remuneration on a basis that’s tax-effective for employers. However, such solutions are not one-size-fits-all and what will work in one market won’t necessarily work elsewhere. A market’s tax and contribution environment can be a treasure trove of reward information that extends beyond the mere costs and percentages. It can help reveal just how likely a fixed cash spend by employers is likely to satisfy employees. In markets where employer costs are high (and potentially uncapped), there is often weariness which accompanies cash compensation of any sort. Instead, companies are more likely to leverage tax-favored benefit and deferral programs where they exist, such as qualified retirement savings schemes.

2019 Developments to Watch in 2020 (and Beyond)

  1. Rollout of PPK pensions begins in Poland
  2. ‘Activist’ approaches to pay equality launched in France, Portugal and Spain
  3. Long-awaited pension reforms on the horizon in Brazil; new social security pension regime announced in Egypt
  4. DEWS unveiled in UAE (DIFC), prototype for funded retirement savings plans in the Middle East
  5. Various employee savings plans rationalized under a new single tax-favored framework in France
  6. Agreement on blueprint for a new framework for supplemental pension plans to equalize them from an age-related perspective in the Netherlands
  7. Government to move forward to allow collective defined contribution plans in the U.K.
  8. Universal Health Care Act to bring about major reforms in the Philippines
  9. Government pushing forward with plans for universal auto-enrollment in retirement plans funded by employees and employers in Ireland

Perhaps the biggest single issue with reward markets is that they never stop changing. To the contrary, one could make the argument that change seems to be coming at an ever-quickening pace. This is particularly true in Europe where states have been increasingly proactive to address issues such as overburdened social security systems and aging workforces, but such developments can be found globally. In 2019, there were a variety of legislation which was either proposed or enacted which could substantially impact employers over the long-term. For companies with large workforces and broad global footprints, just staying up-to-date with such developments can be a real challenge.

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