Herbert Lewis, Contributor

Herbert Lewis

A few weeks ago, the chief executive officer of one of Jamaica's larger businesses contacted me to enquire whether I had any information on the movement of the cost of employee benefits in business today. We had a very long discussion on the matter, and I gave him whatever information I had. I subsequently did a check with 15 companies to find out from them what their experiences were.

The number of employees in those companies ranges from a low of 62 to a high of 416. The employees in eleven of the companies are unionised, while the em-ployees in four are not represented by any union.

Not all the companies provide the same level of benefits. For example, not every one provided a lunch or lunch allowance. And, not every one provided the same number of uniforms or any uniform.

But, every one offered some level of health-care benefit. In some of the companies, the employees enjoy full health insurance coverage for themselves and their family - family here means spouse and children up to the age of 18 and in some cases up to the age of 21 if the child is in a tertiary institution. In other cases, employees are required to make a co-payment of a percentage of the coverage.

Employers in every company with which I spoke expressed serious concern with the leaping cost of providing health care for their employees. They all express the opinion that money which might have gone directly into workers take-home pay is instead being sapped up by their soaring cost for health-care benefits. Some argue that spending on this benefit alone has increased by as much as 30 per cent or more between 2003 and 2005.

One employer explained that his company now pays $8,716 monthly insurance premium to cover an employee, his spouse and two children. Coverage for a single employee is $3,218 monthly. The total cost for employees' health insurance coverage in 2005, according to that particular employer was in excess of $70 million.

Health care concern

Another employer said that his company is constrained by the cost of employee benefit, but the one benefit cost which is of the greatest concern is that of health care. As an example, he cited the cost of medication. He said that the general state of affairs in the country has placed a number of people under severe stress, and that several of his employees are now suffering from hypertension.

According to him one month's supply of medication for that problem a year ago was $1,500. Today, the same month's supply of the same medication is costing $7,000.

Employers are becoming more and more concerned about the financial squeeze caused by relentless increases in their health insurance costs, and sooner or later this concern of necessity must be factored in labour negotiation. It is obvious that the money to cover these costs must come from somewhere.

Spiralling costs

Some of the employers with whom I have spoken, citing spiralling health cost as a reason, have shifted a greater share of premium payments to their employees or require them to pay more out-of-pocket expenses, in the form of higher co-payments for hospital visits or prescription drugs. What I found was that there was not one employer who was not sympathetic towards the employees' plight where such arrangement had to be embarked upon.

That said, employers have expressed the opinion that they can't make blood out of stone and as a consequence will not be pressured to do the impossible. Employers are there to run a business, and it should be recognised that with the rising benefit cost for one benefit, such as, health care, they don't necessarily have the ability to give the level of salary and wage increases expected by everyone. Only, and only if there is productivity increase can meaningful wage/salary increases be realised.

Herbert Lewis is an industrial relations consultant and past president of the Jamaica Employers Federation. He may be reached via email at herblewis@cwjamaica.com.