For the past couple of years, Canada and particularly British Columbia have been grappling with the challenges of a tight labour market that has been characterized by low unemployment and increased labour demand.
During a labour shortage, benefits and compensation packages become increasingly important, not only to attract new employees and drive growth but also to retain current talent.
“We haven’t yet seen a company that runs without people,” said Dan Eisner, associate and employee benefit adviser at ZLC Financial. “People are the most important asset. So a benefit plan has to support their ability to attract them, get them in the door, retain them, so that the company across the street doesn’t take them and engage them while they’re with you.”
These perks take on a special importance in a competitive labour market like B.C.’s.
Employee benefit companies like ZLC work with a range of clients as an adviser or broker to help them develop and customize an attractive and effective employee benefit package. They work with various institutions and stakeholders including companies, unions, non-profit organizations and governments. This means that companies might have to look outside their industry and even the public sector when trying to set up and maintain competitive compensation and benefit plans.
Public-sector employees enjoy a substantial wage and benefit premium compared with their private-sector counterparts.
In B.C., public-sector employees were paid 7.5% more than their private-sector counterparts in 2017, according to a Fraser Institute report. In 2015, that pay advantage was slightly lower at 7.4%.
The wage premium received by B.C. public-sector workers is marginally higher than the difference for the country as a whole, which sits at 7.2%.
However, wages are not the only thing that could lure private-sector employees to the public sector. Public-sector employees are also far more likely to benefit from employer contributions to a registered pension plan than those in the private sector. While 91.8% of public-sector employees are entitled to this kind of pension benefit, only 17.7% of private-sector employees are offered similar retirement plans. Public-sector employees are nearly twice as likely to have a defined-benefit pension plan, which guarantees retirement income, rather than a defined-contribution plan, which does not.
The private sector has been working to respond to the increased labour market pressure from the public sector by engaging with employee benefit companies and compensation consultants to stay competitive. This has helped develop the employee benefits advisory into a sizable industry within B.C.
“The difference has been that there’s a more heightened focus on employee benefits packages now than there has been,” Eisner said. “The best example is that they used to be called fringe benefits and now they’re a core part of any good company’s employee offering.”
