Recovering companies re-establish benefits

Surveys on employee benefits in the Czech Republic were carried out in 2010 and 2011 by the ING Insurance Company and the Confederation of Industry of the Czech Republic. The surveys suggest the number of companies offering various types of benefit increased following a period of economic slowdown. However, for benefits which have no tax advantages, the increase depended on the economic health of the company. Company contributions to the cost of an employee’s training went up.

About the survey

In June 2011, an online survey of employee benefits was carried out by the ING Insurance Company (in Czech) and the Confederation of Industry of the Czech Republic (SP ČR). The survey was first conducted in 2010 with a sample of 173 companies. A total of 112 companies took part in the survey in 2011. In both cases, the survey included companies from all regions, of all sizes and from all sectors. However, the majority of the respondent companies (55%) were from the manufacturing industry.

Structure of employee benefits

According to the data gathered, the number of benefits was positively related to the size of the company. The research also showed that companies offered employees, on average, more than three tax-advantage benefits and almost six benefits with no tax advantages. Slight changes in the structure of employee benefits could be seen when comparing the results of the 2010 and 2011 surveys.

In 2011, 68% of the companies surveyed provided employees with restaurant vouchers (Table 1). This was seven percentage points lower than in the previous year, and the decrease can be attributed to plans published by the Ministry of Finance of the Czech Republic to abolish the tax advantages of such benefits.

Nonetheless, the provision of a number of other benefits increased, including contributions to the costs of further training and contributions from the employer to employee supplementary pension insurance schemes. Indeed, contributions towards training made up the most popular tax-advantage benefit in 2011.

The most significant increase was recorded in the number of companies that offered contributions to employee life insurance schemes, with an increase of 15 percentage points compared to 2010.

Table 1: Tax-advantage benefits (% of companies)
 

2010

2011

Restaurant vouchers

75

68

Training

70

78

Pension insurance

60

71

Life insurance

39

54

Source: ING Employee Benefits, Czech Republic, 2011

The use of a company mobile phone was the most frequently offered benefit that brought no tax advantage (Table 2), with 84% of companies providing their employees with mobile devices. In addition, 80% of the companies surveyed provided a company car for at least some of their employees.

Table 2: Benefits without tax advantages (% of companies)
 

2010

2011

Mobile phone

80

84

Company car

75

80

Beverages

71

79

Material gifts/lump-sum bonuses

57

64

Contribution to sports activities

33

32

13th month’s salary

32

37

Employee loans

31

32

Source: ING Employee Benefits, Czech Republic, 2011

Generally, the proportion of companies offering benefits of any kind is on the increase, with the exception of restaurant vouchers and contributions towards sports activities. It is assumed that this development is due to the improvement in the overall health of the Czech economy.

Better performance equals more benefits

In the case of non-tax-advantage benefits – especially the 13th month’s salary – and other motivational measures such as performance benefits, loyalty bonuses, additional holiday entitlement and paid time off, provision appears to depend primarily on the economic situation of the company. Of companies that had experienced an improvement in their economic standing, 48% provided motivational benefits, while only 30% of those companies whose situation had worsened over the past 12 months did so (Table 3).

Table 3: Impact of the company’s economic health (% of companies)

Economic standing of the company in comparison to the previous year

Worse

No change

Better

Provision of motivational benefits

30

37

48

Intention to reduce or cancel the 13th month’s salary

20

9

2

Source: ING Employee Benefits, Czech Republic, 2011

Conversely, the provision of tax-advantage benefits appears not to depend on the economic performance of the company, with the exception of training course contributions. Of those companies whose economic standing had worsened over the past 12 months, 20% were planning to reduce or cancel this kind of contribution altogether.

Commentary

The survey results show the proportion of companies providing individual benefits. However, information about the percentage of employees receiving such benefits is not available and interpretations of the data need to take this into account.

References

Confederation of Industry of the Czech Republic (2011), ‘Benefits on the increase again, training is at the top (in Czech)’, press statements, SP ČR, 21 July 2011.

ING Employee Benefits Czech Republic (2011), Employee Benefits 2011; Employee benefits in a moderately increasing economy (278Kb PDF, in Czech), presentation at ING, Prague 2011.

Pfeiferová Štěpánka, Research Institute for Labour and Social Affairs (RILSA)

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