TM - August 2008 - (Page 55)

DASHBOARD continued from page 51 are planning changes in beneﬁt provision. In the UAE, newspaper reports have conﬁrmed the government is looking at options for expatriate pension solutions, although it is unclear whether this might mean requiring the private sector to offer beneﬁts or opening up the state system to non-nationals. Either way, such a change would particularly beneﬁt unskilled members of the UAE’s expatriate workforce who may not fall under multinationals’ supplementary pension plans. It will be a major challenge to make the administration of this plan workable. This includes keeping track of the country’s huge and geographically diverse expatriate population and ensuring their money can be successfully returned once they come home. Further, the UAE’s national health service used to be free to all UAE nationals. This is no longer the case. Private-sector companies in locations such as Abu Dhabi and the free trade zones must provide all their employees and families with private medical plans. Consequently, 85 percent of multinationals in the UAE provide a supplementary medical insurance policy, usually through an insured arrangement. tion pension funds. This will start at 2.5 percent of base salary, comprised of 1.66 percent employer contribution (including 0.83 percent for severance-pay funding) and 0.83 percent employee contribution. This is capped at national average earnings of 7,537 Israeli shekels per month, as of September 2007, according to Israel government ﬁgures. Contribution rates will increase each year until 2013 up to a maximum of 15 percent of base salary, comprised of 10 percent employer contributions (including 5 percent for severance-pay funding) and 5 percent employee contributions. The change in pension practices, in particular, is driven by workforce mobility as many expatriates are choosing to stay long term or permanently relocate. In response to competitive pressures and the erosion in value of cash-based remuneration paid in local currencies that are pegged to the weakening U.S. dollar, many employers in the Middle East are motivated to focus on beneﬁt provision. Almost all companies in the Middle East provide additional perks and allowances to their expatriates. These vary between countries and employers, but the majority provide allowances for housing, schooling and ﬂights home. In the UAE speciﬁcally, 86 percent of multinationals in the survey provide housing allowances, while 90 percent provide support with schooling. All participants, without exception, provide allowances for return ﬂights to expatriates’ home countries. Some 60 percent of survey participants across the Middle East report they provide company car beneﬁts, while there has been an increase in demand for protection beneﬁts such as death and disability. Throughout the region, the most popular fringe beneﬁts are longservice awards, mobile phones, social allowances and subsidized health club memberships. Fewer companies provide meal allowances, domestic assistance and hardship allowances. Given the growth in Westernstyle pay and beneﬁts, relocation to the Gulf region today is viewed much less as a hardship placement than in the past. Rebecca Powers is a principal in Mercer’s international consulting practice. Callum Burns-Green is a principal with Mercer’s international beneﬁts business. They can be reached at editor@talentmgt.com. August 2008 There is still some uncertainty about further expected legislative change that could have an impact on medical beneﬁts in the UAE. Most companies pay the entire cost of medical insurance, but it’s likely an element of employee cost-sharing will be introduced. There also are mandatory requirements for private health care in Saudi Arabia and Egypt, but 80 percent of multinational companies in the Middle East provide private medical beneﬁts irrespective of these requirements. Israeli Trends Given Israel’s unique status as the only Western-style democracy in the Middle East, it’s worth noting that Israel’s employee-beneﬁts sector has been in a state of ﬂux since 2000, with the transfer of pension responsibilities away from collectively agreed Histadrut pension funds (deﬁned beneﬁt) toward insurance companies’ provident and managers funds (deﬁned contribution). Proposed changes in legislation likely will give further momentum to this trend. The Israeli government recently introduced a new pension law requiring employers to provide occupational pension plans. This originally was intended to apply only to employers covered under the collective agreement between Histadrut and the Manufacturers Association of Israel. However, this now applies to all employers following the ratiﬁcation of the law in December 2007. The law requires employers and employees to make mandatory monthly contributions to deﬁned contribu- talent management magazine www.talentmgt.com 55 http://www.talentmgt.com

Table of Contents Feed for the Digital Edition of TM - August 2008

TM - August 2008 Editor's Letter Contents Human Performance Leading Edge Foundations Global Background Screening Does Global Assessment Work? Global Total Renumeration: Creat One Organization Border Insecurity: Immigration Reform and Talent Management The Global Workforce: Communication Across Cultures Around the World in How Many Days? Insight: Exelon: Performance Under Pressure Special Report: Perspectives on Managing People Application: Reinventing Sales Rewards at Motorola Dashboard: Mideast Meets West Dashboard: Mergers and Acquisitions 2008 - Don’t Leave Employees Behind Editorial Resources Advertisers' Index Full Potential

TM - August 2008

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