UAE, 22 October 2009: The economic downturn has sparked interest from a growing number of GCC firms in flexible employee benefits as a way to cut costs and retain talent, the latest report from global HR consulting firm Mercer has found. Many more GCC based firms are expected to develop innovative ways to contain the cost of employee benefits, while still providing benefits that attract and retain top talent.

The survey released today confirms a growing worldwide trend for employers to introduce programmes that control costs, while allowing employees greater choice about the type or mix of benefits they receive.

"From a global perspective, close to one in four firms offer some type of employee benefit choice and there's now evidence of a growing interest among local firms," said the GCC head of Mercer's Health & Benefits practice, Callum Burns-Green. "Pressure to introduce what the market terms 'flexible benefits programmes' is being driven primarily by pressure to contain costs but also as a way of offering employees more tailored benefits packages. Further pressure is coming from the increasing number of multinational firms based in the region who already offer similar programmes, and from expatriate employees who have seen been offered similar programmes with previous employers."

The number of local firms offering flexible benefit programmes is expected to grow in the coming years as insurers respond to requests for increased flexibility around group health and risk insurance options.

Burns-Green continued: "A number of our clients are keen to offer their employees greater choice about the level of medical insurance, benefits like club memberships or mobile phone usage, while at the same time putting a cap on the cost. Flexible benefit packages offer a win-win situation as employees get more of what they want and employers can better manage their total cost."

The global survey shows an increase in the level of interest in offering flexible benefits programs is being driven in part by the rising cost of providing medical insurance, and the most important reason for providing choice is to respond to diverse workforce needs and values. Nearly a third of organisations offering choice programmes* said the strategy had helped them to reduce benefit costs.

According to the survey, that included more than 1,700 and was carried out in 47 countries, 27 percent of employers provide at least some choice in the benefits they offer, while 14 percent have comprehensive flexible benefits programmes. Comprehensive or "full flex" programmes are defined as having core benefits and optional benefits, with credits and a spending account.

Current benefit choices offered

The types of benefits offered through flex programmes can vary widely by region and country.  Across all survey respondents:  

Insured benefits most likely to be offered are medical (71 percent for employees; 48 percent for dependents), life insurance (57 percent), dental (52 percent), accident (47 percent) and vision care (35 percent).

The range of allowances includes those for mobile phones/telecommunications (29 percent), cars (29 percent), gym memberships (28 percent), childcare (24 percent), food (18 percent), public transportation (15 percent) and housing (13 percent).

Other benefits commonly offered include retirement/employee savings plans including voluntary pension (46 percent), health screenings (28 percent) and holiday buy/sell options (24 percent).

*For the purposes of this survey, "employee choice" was defined as an arrangement whereby employees may exchange some or all benefits for others or for increased cover, or are given a set budget to "purchase" supplemental benefits.  Comprehensive or "full flex" programmes were defined as having core benefits, optional benefits, credits and a spending account.

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About Mercer
Mercer is the leading global provider of consulting, outsourcing and investment services. From its GCC headquarters in Dubai, Mercer teams work with clients across the region to solve their most complex benefit and human capital issues. Mercer is the world's largest HR consulting firm, with revenue of US$3.5B. It is the global market share leader in retirement, health & benefits and investment consulting. It is an advisor to nine out of ten Fortune 100 companies. It has been judged the most trusted HR consulting brand in the world. Mercer is a truly global firm serving clients in more than 40 countries and 180 cities worldwide. Mercer has been rated the most prestigious HR consulting firm to work for. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.com

© Press Release 2009