James F. Byrnes, a U.S. judge and politician, once said, “Too many people are thinking of security instead of opportunity.” As the world continues wrestling with unprecedented times in which security (in one form or another) has been at the top of most agendas since 2020, the appetite for opportunities is slowly emerging again. And among governments and companies alike, it often starts with one thing: change.
If 2020 was dominated by companies’ need to “get by” to deal with the sudden, short-term financial, operational and people issues posed by the COVID-19 pandemic, then 2021 has shown clear signs of longer-term thinking. To a large extent, 2021 reflects companies reverting to business as usual, with the added twist that “as usual,” particularly as it relates to employees, is very different.
Increasingly, employers are examining how to optimize their benefit offerings to account for hybrid workforces, tighter labor markets and rising costs (among other things), according to research by Willis Towers Watson. Ultimately, it’s a quest to improve the employee experience to attract and retain talent, meet business objectives, and distinguish companies as employers of choice.
Of course, human capital management goes beyond what companies want to do. There’s also what companies must do. Like employers that were focused on keeping the lights on in 2020, much of the regulatory landscape has been characterized by governments implementing transitory, pandemic-driven measures.
In 2021, governments began adapting more forcefully to the new normal. Some agencies adopted measures aimed at regulating increasingly prevalent employment frameworks (e.g., hybrid working), while others proposed or passed new laws to address deficiencies exposed by the pandemic. Still others re-focused on long delayed or unavoidable reforms.
Since October 2020, nearly 160 significant employment-related reforms have been enacted, announced or proposed in the 60 major economies represented in Willis Towers Watson’s 2021/2022 Global 50 Remuneration Planning Report. Western Europe, Asia Pacific and the Americas have been the most active markets, while Central and Eastern Europe as well as the Middle East and Africa have been less active, reflecting the comparatively lighter regulatory approach common to those regions. (See Figure 1.)
A line graph displaying average changes per country with Global at 2.5, Americas at 2.75, APAC at 3, CEE at 2, MEA at 1.25 and WE at 3.
Source: 2021/2022 Global 50 Remuneration Planning Report
While roughly two-thirds of changes took effect by November 1, 2021 (giving employers plenty to review), there is no shortage of potential or pending reform measures to monitor and prepare for in 2022. (See Figure 2.) Willis Towers Watson monitors such developments on an ongoing basis and issues Global News Briefs to allow employers to stay up to speed with the pace of change.
Future effect for WE: 24%, MEA: 20%, CEE: 29%, APAC: 30%, Americas: 34%, Global: 28%. Proposed/pending for WE: 9%, CEE: 4%, APAC: 13%, Americas: 3%, Global: 8%.
Source: 2021/2022 Global 50 Remuneration Planning Report
While a multitude of topics are covered in the latest edition of the Global 50 report, a few stand out. Collectively, retirement benefits and paid leave represent more than one-third of all reported reforms, largely in Western Europe and Asia Pacific (about three-quarters). (See Figure 3.)
Retirement: 24%, paid leave: 15%, compensation: 10%, remote/hybrid work: 6%, foreign workers: 6%, health care: 5%, other: 34%
Source: 2021/2022 Global 50 Remuneration Planning Report
Though both retirement and paid leave were global hot topics prior the pandemic, some reforms were delayed in 2020 due to shifting priorities. In 2021, new reforms were fueled by a combination of mounting fiscal pressures and a growing interest in employee wellbeing stemming from the effects of the pandemic. In other cases, reforms predate the pandemic but are no less pressing, such as the impending August 2022 deadline for EU members to transpose the 2019 Work-Life Balance Directive into law.
As highlighted by Table 1, more than one-third of all reported changes were in the largest economies (G20), which tend to have more nuanced regulatory environments for pay, benefits and employment, reflecting the greater complexity among these economies. Similar to the global trend, more than one-third of those changes have either not come into effect yet or are only proposed at this stage.
Argentina: 3, Japan: 2, Saudi Arabia: 2, Italy: 2, India: 1, South Africa: 2, Australia: 1, Brazil: 1, France: 1, Russia: 1, Turkey: 1. Source: 2021/2022 Global 50 Remuneration Planning Report
Given the large workforces global companies often have in these markets, employers should remain particularly aware of changes, as therein may lie additional opportunities to improve, optimize or mitigate the effects of changes on the workforce (in addition to remaining compliant).
To quote the ancient Greek philosopher Heraclitus, “Η μόνη σταθερά στη ζωή είναι η αλλαγή,” which translates to “the only constant in life is change.” And the best approach for effectively and successfully managing that change, avoiding risks and making the most of opportunities is with a defensible approach based on solid insights and data.
