Canadian employers struggling to meet employees’ benefit needs

Since the pandemic, employees’ needs have changed. With this change comes an increased demand for better benefit packages.

However, most employers are unable to meet this demand, with 70 per cent saying it’s impossible to offer all the benefits employees want, according to a report from Express Employment Professionals.

The report also revealed that 42 per cent of employers said employees are asking for better benefits this year compared to last due to the increased cost of living.

The cost-of-living crisis across Canada is contributing to an increased demand for benefits from employees, as is the presence of multiple generations within the workforce, according to Daniela Gatti, Ph.D. student and teaching assistant at the Centre for Industrial Relations & Human Resources at the University of Toronto.

“The intergenerational workforce creates challenges because different generations have varying needs because they’re at different stages of life and their careers. Ultimately, there’s a lot of benefits that are becoming a priority for employees now, rather than just one,” Gatti said.

Modifying employee benefits

Nearly six in 10 (59 per cent) employers say their company has modified benefits in hopes of retaining current employees or attracting new ones, up from 51 per cent last year, according to the survey.

Modifying benefits can be beneficial especially within industries experiencing a labour shortage, as this can help employers stay competitive. In some cases, this can be more affordable than offering a higher salary, Gatti said.

But employers should be cautious about adding incentives in lieu of improved benefits, she said. For example, employee outings may have short-term benefits, but these will only go so far if employers are not meeting other compensation and benefit needs.

“It may be easier for an employer to increase their benefit offerings. Not only are they meeting the needs of their employees, but they don’t have to keep increasing the salary year after year, which employees may begin to expect if they start receiving a salary increase,” Gatti said.

Benefits seen as entitlements

Post-COVID, employers are dealing not just with added benefit requests, but obligations, as employees are increasingly seeing benefits as entitlements, said Rafael Gomez, director at the Centre for Industrial Relations and Human Relations at the University of Toronto.

With this entitlement comes an uptick in the use of benefits and a rebalancing of the total benefits package that employees want, he said.

“"This is partly due to employees caring and valuing certain benefits and issues more and partly because employers are experiencing a greater obligation to employees, sometimes by statute, as the employment relationship is shifting," Gomez said.

Employees are starting to see the employment relationship a little differently than they did before, he said.

“Now, they're maxing out everything they're entitled to and wanting to get the most out of their benefits packages.”

Within the benefits sphere, there is a growing need for health and extended benefits relating to wellness alongside a need for flexibility within roles, Gomez said. The smallest demographic within the workforce is now workers with children, making benefits like childcare costs and education costs less of a financial cost to employers because fewer workers are in that demographic.

Now, the workforce is becoming more of an “inverted U” where younger workers and older workers comprise most of the workforce, he said.

“We are seeing fewer workers in their 40s and early 50s, which is usually where you have family obligations and caregiving, so the normal things that those workers ask for are less present. However, the benefits that young people want and the benefits that older people want are what’s putting pressure on employers.”

Is increasing benefit offerings realistic?

The survey noted that 36 per cent of employers plan to increase benefits compared to last year. However, 58 per cent of employers say their company’s traditional benefits will remain the same.

For businesses that are operating as efficiently as they can, without anything else changing, then an increased cost to improve benefits is difficult to absorb without changing something else, such as reducing the number of employees, Gomez said.

With benefit demands increasing, employers need to determine if they can ask for something else in return from their employees, creating a trade-off, he said.

“Do employees really value these benefits? If so, what are they willing to trade off? Are they willing to work, perhaps, extra hours? Are they willing to invest in their own training to become more productive? Are they willing to moderate their wage demands in order to get the benefits that they want?

“This is an opportunity for employers to sense what it is that employees truly want and rebalance the employment bargain and relationship accordingly.”