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Companies operating in Central and
Eastern Europe are more likely to offer employees
death and disability benefits than medical and
retirement benefits, according to John Swabey,
Senior International Consultant of Watson Wyatt,
Brussels. For medical benefits, Russia and
Kazakhstan are the main exceptions with over 70%
and 50% of companies, respectively, providing
this benefit.
- Over
60% of companies in Hungary, Poland,
Romania and Slovakia offer death
benefits, compared to fewer than 40% in
Lithuania, Belarus and Uzbekistan.
- Over
50% of companies in the Czech Republic,
Hungary, Poland, Romania, Russia,
Slovakia and Slovenia offer disability
benefit; only just over 20% of Uzbekistan
companies offer the benefit.
- Over
70% of companies in Russia offer medical
benefits, compared to just 5% of Croatian
companies. In Poland, the situation has
changed dramatically compared to last
year, probably allied to 1999 reforms to
the social security system. Some 50% of
companies provide medical benefits in
1999 compared to just 10% in 1998.
- Fewer
than 20% of companies offer retirement
benefits in the region generally, with
Hungary, Russia, Slovenia and Bulgaria at
about 18%. No companies in Belarus offer
retirement benefits and only about 1% in
the Czech Republic and Lithuania.
John Swabey, Senior
International Consultant of Watson Wyatt in
Brussels with special responsibility for Central
and Eastern Europe, said that the current
position does not tell the whole story.
"Whilst companies in Central and Eastern
Europe have not yet really embraced the need to
offer retirement benefits, that is changing
significantly. The increasing focus on retention
coupled with reduced state provision makes
retirement benefits a significant issue", he
said.
That retirement provision
in Central and Eastern Europe will change is
clear to see:
- Hungary
and Poland: complete overhaul of the
pensions system "in the
making", with compulsory
contributions to individual pension
accounts for younger employees.
- Croatia,
Lithuania, Slovenia, Romania: three-tier
pension systems due in 2000.
- Russia:
non-statutory pension law signed in 1998,
permitting defined benefit and defined
contribution pension plans. Tax relief
not yet in place but the aim is to make
company contributions tax-free,
investment returns to be tax-free and
benefits taxed as income.
- Czech
Republic: statutory retirement savings
introduced; more radical reform once more
under debate.
John Swabey commented:
"The provision of benefits by companies in
Central and Eastern Europe is changing rapidly.
There is the need, common throughout Europe, to
retain skilled and experienced workers together
with the need to attract the right level of
staff. Added to this is the pressure on some
countries to move benefit provision more in line
with Western Europe as part of the preparation
for membership of the EU.
"For companies
operating or seeking to operate in Central and
Eastern Europe, access to the most up-to-date
information is essential and at Watson Wyatt we
seek to ensure that companies can make the right
decisions on the bases of current information and
advice drawn from substantial experience",
Swabey concluded.
Notes to Editors
The
Watson Wyatt Forum on Compensation, Benefits and
Employment in Central and Eastern Europe
The 1999 series of Forum
meetings was held throughout Europe in June and
July in Moscow (June 8), Budapest (June 10),
Vilnius (June 15), Warsaw (June 17), Bucharest
(June 22), Prague (June 24), Vienna (June 29) and
Reigate (2 July).
Watson
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For
further information contact:
Simon Bleach
Watson Wyatt Partners
Tel: +44 1737 274 358 or email |
John Swabey
Watson Wyatt (Brussels)
Tel: + 32 2 678 1550 |
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