Public sector benefits could do with some fresh thinking – Research

Researchers say the security and well-being of employees in the public sector are important as they deliver a range of crucial services to South Africans, from municipal services to education to utilities – many of which have been front-line services in the fight against COVID-19.

by Riyaz Patel

 Public sector employees “expect a lot more than the traditional retirement and insurance benefits, with younger workers in particular, looking for benefits to deliver more immediate value,” new research shows.

Shaeera Essop, Strategic Client Engagement manager at Momentum Corporate, the company who undertook the study, said “employee benefits are a critical aspect of the employee value proposition offered to these workers.”

“It’s not surprising to note the growing popularity of wellness and rewards programmes and value-added benefits which has been highlighted by the economic realities of the COVID19-induced lockdown.”

Wellness and reward benefits tops list

Essop said while most employees in the sector have access to the more traditional employee benefits, such as retirement benefits and medical aid, access to less traditional employee offerings such as a pension-backed home loan or wellness and rewards programmes were significantly lower among employees.
And, she said, it is these ‘non-traditional’ benefits that respondents felt were important, with wellness and rewards programmes topping the list of benefits they believed their employer should be offering.
Essop said the trends extracted from the survey revealed a growing need for new kinds of benefits; what they are, and how employers can adapt; younger employees demand a different offering; flexibility is key; and that access to financial education and counselling still a factor.

 Broad sample

The sample was spread across a range of public sector workplaces, with 25% of respondents working for state-owned enterprises, 24% for municipalities, 22% for universities and 12% for provincial or national government.
More than half of the 657 respondents in the research were women over the age of 35 years, middle-class and well-educated, with children at home.
The study found that around 80% of respondents received a retirement benefit and medical scheme membership as part of their employment contract. Other benefits respondents could access through their employer included funeral cover (42%), disability cover (28%) and life cover (26%).
Access to less traditional employee benefits such as a pension-backed home loan or wellness and rewards programmes was a lot lower, at only 18% and 17% respectively.
Other benefits which respondents wanted their employer to offer included critical illness, savings for emergencies and value-added benefits.
The survey also found a growing need across employees for greater flexibility and control when it comes to their employee benefits.

Need for financial education

The vast majority of respondents, some 95%, believed that they have a good or fairly good understanding of their benefits.
However, nearly 60% indicated that they needed financial education and advice to navigate a better financial future, and looked to their employer for this support, the research findings showed.
Essop says access to professional benefit counselling as well as qualified financial advisers is an essential part of any employee benefit value proposition nowadays.

“Benefit counselling offers employees a solid understanding of their employee benefits and, along with financial coaching, helps employees master key financial best practices, like developing a household budget and a financial plan.”

She said access to the expert advice of a qualified financial adviser is also of critical importance, particularly in uncertain times when many employees may end up making decisions based on fear, scarcity and emotion.
Citing the Bob Dylan classic, ‘The times, they are a-changing,’ Essop said times are certainly changing, but the key question was how well employee benefits value propositions are adapting in these changing times.

Among the best paid in the world

The research on public sector employee benefits coincides with new data from the Organisation for Economic Co-operation and Development (OECD) which found earlier this month that South Africa’s civil servants are some of the best paid in the world when considering the relative size of the country’s economy.
The study found that public sector wage increases are the main driver of government spending rather than increases in employment.

“Compared in terms of US dollar purchasing power parity (PPP), the remuneration of South African public sector managers is comparable to their counterparts in Norway. Even for non-management senior officials, teachers and education personnel, South Africa has one of the highest levels of remuneration both in terms of GDP per capita and US dollar PPP,” the OECD said.

The OECD said top managers in the South African civil service earn an average revenue corresponding to nine times of the GDP per capita in 2017, while the ratio is below six for the OECD average.
Even for non-management senior officials, teachers and education personnel, South Africa has one of the highest levels of remuneration both in terms of GDP per capita and US dollar PPP, the group said