Customary organizational benefits are the privileges that an employee is entitled to at their place of work. These benefits are defined by government rules and policies, trade unions' influence, employees' demands, and individual, organizational interests. Examples of these benefits include health insurance, minimum wages, remuneration, paid leave, and retirement benefits. Markedly, it is at the organization’s discretion to vary or eliminate these fringe benefits prospectively at any time, and the effect is immediate once the employee is notified. The objectivity of this essay will be to conduct a feasibility study that will entail discussing customary employee benefits of two countries (Canada and Germany) and explain the differences in relation to what organizations in the U.S. practice. The essay will recommend what country an organization is best suited for establishment based on what will be provided.
The average public health insurance cost of people living in Germany, as set by Gesetzliche Krankenversicherung (GKV), is 14.6% of an employees' gross pay. The figure is shared equally between the employer and employee. An additional 1.7% is charged by any healthcare provider and payable by the employer (Expatrio, 2020). Nevertheless, there is a capping on the amount charged set at the wages of €360 per month, with the employer paying a similar amount. A mandatory 3.05% nursing care contribution is also paid by everyone with a child, while those without pays 3.3% and is also shared by both the employer and employee. This statistical data translates to approximately 51.7% employer's contribution toward an employee's health insurance policy. Thus, both employers and employees in Germany pay an almost equal sum of $417 each. The reason why employers' contribution equals that of employees in Germany is that the process of redistribution collectively finances German’s social security costs as per the set GKV policies. In Canada, the employer's average health insurance policy is 82%, which translates to $471, while the employee caters for the remaining 18%. Besides, Canada has a universal healthcare plan which encompasses providing free healthcare to its public. Still, some employers go the extra mile to provide a supplementary health insurance plan regardless of it not being legislatively approved. Like in Canada, most employers pay 82% of the health insurance package for their employees, but the figure is average $471.25 per month. However, the figure may vary depending on the size of the business or organization. Small-sized businesses with employees ranging between 50-100 employees pay averagely 77% while the employee takes care of the remaining 23% (Cameron, 2017). The three countries seem to have a minimum employee contribution set at 50% of the whole insurance health policy for an employee, but the actual percentages of an average contribution vary with Canada and U.S. leading at the top.
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As of 2020, the monthly minimum wage was set at $1,837, which was an increase of 1.73% the previous year. The rise in the figure was brought about by political influence, transparency, setting the wage limit, and economic growth realized in the country (Christine, Rasche, Matthias, 2019). An employee's salary determines the tax bracket they fall in, and the average figure is 14%, which makes the minimum wage turn out. Over the years, Canada has constantly raised its minimum wage, and as of 2020, the figure stood at $2,848 per month. The reason for this wage figure is that Canada has a high practical tax rate that stands at 28% of gross salary and is higher than the U.S. and Germany. In America, the average monthly salary package of 2020 is $1,297 based on federal government requirements though different states have varying figures with Washington D.C. leading the park. Much of this figure is influenced by the tax rates set by the U.S. federal government that average to 24%. Comparing the three countries, the U.S. turns out to have the lowest minimum wage. The reason for this turnout is the lack of mobility in the American workforce that puts most employers in an advantaged position than employees. However, approximately 30 states compensate their labor force above the set minimum wage floor following the acknowledgment that the minimum wage is not a living wage anymore. Since the late 1960’s the federal minimum has failed to keep up with the ever-rising cost of living since the late 1960s.
Any employee must be allowed some time off work. However, different countries have different thresholds of the maximum number of days that an employee can go on paid leave. In Germany, employees who work for six days in a week are allowed to stay off work for a maximum of 24 days in a year. Those who work for five-days-a-week can go on a paid vacation of up to 20 days a year. The third cohort is where employees go to work for only three days in a week and are allowed to stay off work up to 16 days in a year. However, these are only prescribed minimums, which may change based on handicap or maternity requirements. Most employers grant their employees beyond the set minimum bring the average between 25-30 days a year, making Germany among the countries with the highest-paid off workdays. Canada has an average paid vacation entitlement of 10 days. When holidays are included, this figure rises to 19 days in a year. The United States depicts a stunning figure of lesser paid vacation days than Canada (Ranosa, 2020). To be precise, the U.S. has no paid days off work. The reason why Germany ranks among the top paid vacation givers is rooted in the European culture, which appreciates work/life balance. Germans believe that work ethics and productivity goes hand-in-hand with ample time off work, which acts as a reset button for most employees to relieve stress. This culture has often given the same productivity as Americans who are routine workaholics (Stanberry, 2010). Besides, the U.S. federal law does not provide paid off workdays, which leaves the decision to offer paid vacation days. Canada, on the other hand, has few bragging rights though not satisfactory. Ten days in a year does not seem to match a total of 365 days for an employee hitting the asphalt every morning heading to work, lest they miss a salary. It seems most of the Canadian companies and organizations value their time rather than the employees' time.
Another employee benefit to focus on is maternity leave. Getting pregnant while working in Germany entitles an employee to be paid for up to 14 weeks while on maternity leave. If an employee experiences premature birth or multiple births, they are entitled to stay off work for 18 weeks (Iamexpat, n.d.). In Canada, an employee entitled to stay off work and get paid for up to 15 weeks of maternity leave. This figure may exceed with an additional 48 weeks, which are not paid for by the employer. However, the U.S. has a different way of handling things. A pregnant mother is entitled to unpaid maternity leave of up to 12 weeks, as provided by the federal law. This makes the US the only nation in the developed world where employers are not mandated to provide paid leave for new moms. In Germany's case, most Germans are protected by the government, which considers the psychological wellness of a parent as a key factor influencing performance at work. This is why most employers have longer maternity leave than the U.S., which unfortunately believes in the workaholic labor force. Still, the federal law disregards granting paid maternity leave, which leaves the employer in total control of whatever benefits they give such employees if they wish to do so. On the other hand, Canada sets the bar high for maternity leave periods and benefits that can be enjoyed for up to 15 weeks. Their compassion for parenting pushed lawmakers to pass this as a bill to ensure that mothers are given enough time to recover physically and mentally and give their children enough time they deserve.
In terms of employer contribution toward employee health insurance policy, these three countries have an almost equal contribution. However, Germany employers should raise their packages a bit so that the employees are cushioned more from hefty medical bills. Making it about 70% will sound reasonable because this implementation will motivate employee productivity because these employees feel more appreciated by their employers. I believe that Germany has a reasonable minimum wage package because it has its tax rates maintained low. However, Canadians do not tell the same story. Employers in Canada should collectively approach labor organizations and convince them to pursue the government for a reduced tax rate so that the minimum wage drops. This action will increase the profit margin for employers while still maintaining the net income for employees because the only figure that will drop will be gross pay. Finally, the U.S. federal government and employers need to stop in their tracks and reassess the paid time off work policy. Employees are humans, and they need a break-off work to at least rejuvenate their energy and come back strong. Failing to pay them pushes them to the edge, making them continue coming to work regardless of tiresomeness and monotony, which may hamper productivity. For instance, lesser women are taking maternity leave in America despite the growing economy. This can be attributed to the expensive proposition of dropping household incomes when the child is born and will not recover until when the mother has resumed work. The status quo remains despite the fact that having kids is an inescapable undertaking that determines the country's biological and economic survival. The German approach is quite commendable because if they are offering paid vacation of up to 30 days yet getting the same productivity as the Americans, then why not give it a try (Ranosa, 2020)?
From an economist's perspective, I would recommend that an organization establish itself in Germany rather than Canada. The benefits that I would recommend is retaining the 50% employee contribution toward health insurance as set by GKV because this figure will make the social security process sustainable to the organization. I do not think I may want the organization to borrow much from the U.S. because its customary practices seem not to appreciate employee welfare. An example is the unpaid days off work policy as set by the federal government. This practice will demoralize employees from taking breaks off work, which will hamper their productivity levels. Also, by denying maternity benefits to working mothers, the US fails to empathize with the physical and health difficulties they face while executing their duties at the workplace while carrying the baby in the womb, and rearing it after birth and is a source of demotivation. Tax rates in Germany are reasonable, too, making the minimum wage reasonably low but in a balanced manner.
References
Expatrio, E., 2020. Costs Of Health Insurance In Germany . [online] expatrio.com. Available at:
<https://www.expatrio.com/living-germany/costs-living-germany/costs-health-insurance-germany> [Accessed 22 July 2020].
Cameron, A., 2018. Percentage Of Health Insurance Employers Pay | Costs & More . [online]
Patriot Software. Available at: <https://www.patriotsoftware.com/blog/payroll/what-percentage-health-insurance-employers-pay-how-much/> [Accessed 22 July 2020].
Ranosa, R., 2020. Are Canadians Getting Enough PTO? . [online] Hcamag.com. Available at:
<https://www.hcamag.com/ca/specialization/benefits/are-canadians-getting-enough-pto/195870> [Accessed 22 July 2020].
Stanberry, G., 2010. Why Germans Have Longer Vacation Times And More Productivity . [online]
Business Trends and Insights. Available at: <https://www.americanexpress.com/en-us/business/trends-and-insights/articles/why-germans-have-longer-vacation-times-and-more-productivity-1/> [Accessed 22 July 2020].
Iamexpat, I., n.d. Sick, Holiday & Maternity Leave In Germany . [online] IamExpat. Available at:
<https://www.iamexpat.de/career/working-in-germany/sick-holiday-maternity-leave#:~:text=If%20you%20become%20pregnant%20while,found%20to%20have%20a%20disability.> [Accessed 22 July 2020].
