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Employers Get Benefit Cost Reprieve


Canadian organizations got a modest reprieve from the increase in employee benefits costs in the past two years, but the relief will be short-lived, making cost containment an ongoing priority for employers, says the Conference Board of Canada’s ‘Benefits Benchmarking 2012’ report. Employee benefits represent a significant investment for employers. The average annual cost of providing benefits is $7,061 per full-time employee. Annual costs per employee are higher in the public sector at $7,498 than in the private sector at $6,922. For a typical employer, this translates into spending of just over 10 per cent of gross annual payroll. Cost containment is gaining traction as a top short-term priority for employers. In fact, in terms of employers ranking of the objectives of their benefits strategy, cost containment falls only after ensuring compliance with regulatory requirements and maintaining their competitive position in the market in order to attract talent. Employers have been slow to respond to rising benefit costs that have, historically, been increasing at a rate of 10 per cent year over year. They are reticent to put in place cost containment measures for fear of dissatisfying current employees and impacting their success in attracting new hires. Of late, employers have been lucky that external factors, including decreases in the cost of prescription drugs due to generic pricing reforms and patent expiries, have dampened the rate of benefit cost escalation. It has also given employers some false confidence that they have become more effective at controlling benefit costs for the long-term.

Courtesy of Benefits and Pensions Monitor website News Alerts

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