HR 205 Ch12 martocchio 6e

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Part Four: Extending Employee Benefits:
Design and Global Issues
Chapter Twelve: Global Employee Benefits at a Glance
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.

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Learning Objectives
 In this chapter, you will gain an understanding of:
− the differences among benefits in the U.S. and around
the world.
− paid time-off benefits in various continents and
countries.
− protection benefits such as retirement, health care, and
social security in various continents and countries.
− legal and regulatory influences on employee-benefits
practices.
− other practices that distinguish countries’ benefits
programs.

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Overview
 Chapter twelve examines paid time-off and
protection benefits in countries on various
continents, including:
− North America,
− South America,
− Europe,
− Asia,
− Africa, and
− Australia.

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Quantifying Elements of Employee
Benefits outside the U.S.
 The gross domestic product (GDP) describes
the size of the country’s economy.
 GDP per capita indicates the standard of
living within a country.
− Purchasing power parity (PPP) indicates GDP
valued at prices prevailing in the U.S.
 Another important measure is the per capita
expenditure on health care.

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North America
 NAFTA .
− The North American Free Trade Agreement is a
trade bloc between the U.S., Canada, and Mexico.
• A trade bloc is a group of countries who agree to
reduce trade barriers between themselves.
− The North American Agreement on Labor
Cooperation (NAALC) promotes cooperation
between trade unions and social organizations.

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Canada
 Constitutional monarchy.
 Employment law falls within the jurisdiction
of the provinces.
 The origins of common law governing
individual employment contracts are the
− English Statute of Labourers of 1562 which
established working hours and wages.
− Quebec has its own Civil Code of Quebec.

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Canada
Paid Time-Off Benefits
 Paid holidays vary by
province – 6 to 10 days.
 Two weeks paid vacation.
 Paid maternity leave up to
17 weeks, parental leave up
to 35 weeks.
 Compassionate care leave
up to 26 paid weeks.
 No military leave.
Protection Benefits
 Two state pension plans.
− One for Quebec, one for rest.
− Employers and employees
contribute.
− Executive plans differ.
 Medical and basic hospital
care is paid by taxes.
 Both government and
employers provide short-
and long-term disability.

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Mexico
 A federal republic and labor law is based on
Mexican Federal Labor Law.
− Clearly defines the terms worker and employer.
 Free market economy is comprised of
agriculture and new and old industries.
 The Labor and Social Security article of the
constitution is still in effect.

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Mexico
 Paid holidays and double
pay for working holidays.
 Females get 12 weeks paid
maternity leave.
 6-12 vacation days.
− After five years – 14 days.
− Two additional days for each
five years worked.
− Employers pay vacation
premium – 25%.
Protection Benefits
 Mexican Social Security
Institute protects during
disability, retirement, etc.
− Employees and employers
contribute.
 Mandatory individual
retirement account system.
 Health benefits provided by
the Mexican Social Security
Institute facilities.

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South America
 Brazil, Argentina, Columbia, and Chile are the
largest economies – Venezuela and Peru too.
− Venezuela has large oil reserves.
 Human development index (HDI) is a UN
comparative measure.
− Argentina and Chile have the best HDI.
 In 2004, the South American Community of
Nations was formed, a large trade bloc.

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Brazil
 A federal republic, well-developed and global.
 Employment relationships are regulated under
the Consolidation of Labor Laws.
− For example, law states that continuity applies to
all employment contracts, both written and oral.
− In reality, employers discharge employees at will.
• There are available workers who will accept lower pay.
• Not enough incentives to engage in good-faith labor
relations, and job security is often lacking.

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Brazil
 Law provides for an annual
30-day paid vacation,
− plus a bonus of one-third of
monthly salary.
 Maternity leave is 120 days
and paid by social security.
 Paternity leave is five days
if allowed.
Protection Benefits
 Social security system in
effect since 1991.
 Social insurance is provided
as pension with both
employees and employers
contributing.
 The Unified Health System
provides medical services
for residents of Brazil.

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Argentina
 A democratic republic.
 Strong educational and rich natural resources.
 Suffered economic decline and depression in
the 1990s.
 Various successive governments have tried to
revive the economy.

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Argentina
 14 days paid vacation which
increases with seniority.
 3-6 months of sick leave.
 3 months maternity leave
paid by social security.
 Permissible short leaves of
absence.
 12 paid holidays with
double pay for working.
Protection Benefits
 Mandatory pension system.
− Employees and employers
contribute.
− Also funds disability and
survivor benefits.
 Mandated health and life
insurance – employer pays.
− Benefits defined by the
Ministry of Health and
Environment.

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Europe
 The European Union (EU) was aimed to
becoming an economic superpower.
 The concept of “employment at will” does not
exist in the EU as in the U.S.
 Member states have minimum standards.
 Each member also has legislation or civil code
provisions applying to employment contracts.

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France
 A democratic republic who is transitioning
from a traditional model to a free market.
 Workers get better benefits than U.S. workers.
 Employment laws incorporated in the French
Labor Code.
 Mandatory profit sharing, participative
management and “just cause dismissal”
characterize employment relationships.

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France
 25 days paid vacation.
 12 paid holidays with
double pay for those
working on Labor Day.
 Women receive 14 weeks of
paid maternity leave.
Protection Benefits
 Government pensions
 Social security benefits:
− unemployment insurance,
health insurance, and
retirement insurance.
 Employers pay for
employee health insurance.
 Flexible rules for upper
level employees.

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Germany
 A federal republic with the fourth-largest
world economy.
 Unemployment rates have been very high.
 Germany has been pushing labor market
reforms – increasing the retirement age and
increasing female workforce participation.
 There are rising concerns about aging
workforce and high unemployment.

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Germany
 9-13 official holidays.
 24-day minimum vacation.
 Maternity Leave Law is
− 14 weeks paid leave.
 Continuing education days.
 Job retention if drafted.
 Sick leave up to 6 weeks.
 Child-rearing leave and
family leave.
Protection Benefits
 Statutory pension insurance,
company pension plans, and
private life insurance
comprise pension benefits.
 Mandated health insurance
paid equally by employer
and employee.
− Higher level employees can
opt out and purchase private
insurance.

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United Kingdom
 The U.K. is a constitutional monarchy and the
second-largest economy in Europe.
 A variety of common law and statutory
provisions govern employment relationships.
 The most significant reforms came under the
Employment Relations Act of 1999.
 Terms of employment are generally negotiable.

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United Kingdom
 28 days of paid annual leave
including holidays.
 28 weeks of sick pay.
 26 weeks of paid maternity,
and 6 weeks paternity leave.
 Up to 13 weeks unpaid
leave for child care.
 Flexible work arrangements
for dependent care.
Protection Benefits
 State pension, supplemented
with:
− state second pension,
company pension, personal
pension, or stakeholder
pension.
 Medical services provided
by National Health
Service.

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Asia
 As of 2016, China was the largest economy in
Asia, followed by India and Japan.
 Several trade blocs, including the Trans-
Pacific Partnership (TPP) set in 2016.
− 12 Pacific Rim countries.
 No unifying economic body in Asia.
 Several countries not mentioned also are
seeing an influx of foreign investment.

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The People’s Republic of China
 The PRC is a communist state with a fast-
growing economy.
 Shifting from a centrally planned system to a
more market-oriented one.
 The PRC Labor Law was established in 1995.
− A break from the older welfare system where
employees were owned by the state.
− Now, individual contracts define employment
relationships.

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The People’s Republic of China
 Medical leave ranges from 3
to 24 months with 80% pay.
 7-14 paid days of annual
leave.
 “home leave” is permitted.
 Women receive 90 days of
maternity leave.
Protection Benefits
 Unified basic pension
system with individual
accounts.
− Only employees contribute.
 Both workers and employers
contribute to health benefits.
− Basic Medical Insurance
Fund consists of a Pooled
Fund and Personal
Accounts.

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Japan
 A constitutional monarchy.
 Keiretsu is an eroded system in Japan.
 Employment relationships are based on
− freedom of contract, and
− recent laws on labor standards, unions, minimum
wages, childcare and family leave, etc.
 Employee-benefits laws include mandatory
participation in various insurance schemes.

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Japan
 10-day leave after 6 months.
 Additional days up to 20.
 No holiday paid time-off.
 Maternity leave is granted if
requested: 8-14 weeks.
 Child care leave up to a
year.
 No military leave policy.
 Time off for civic duties.
Protection Benefits
 The social insurance system
has a flat-rate pension
benefit for all residents.
 The National Health
Insurance program covers
medical care.
− There is no limit to duration
and cost-sharing is based on
age and income.

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India
 A democratic federal republic with a diverse
economy plagued with income disparity.
 Basic constitutional legislation governs
employment relationships.
 The Directive Principle of State Policy
affects various aspects of the relationship.
 Wide variations exist between public and
private sectors with the Ministry of Labour
governing the public sector.

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India
 Annual leave is calculated
based on days worked.
− Allowed to roll over to the
following year up to 30 days.
 Paid maternity leave, but no
statutory provision.
 Various paid holidays.
Protection Benefits
 Employees’ provident funds
were first passed in 1952.
 State governments provide
medical care on behalf of
the Employees’ State
Insurance Corporation.
− Duration of benefits range
from 3 months to 1 year
depending on contributions.

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Africa
 The UN states that the bottom 25 ranked
nations in the world are all in Africa.
 Economic success lies in South Africa and
Botswana.
 Comparable success in Ghana, Kenya,
Cameroon, and Nigeria.
 Nigeria has large oil reserves and the highest
population in Africa.

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South Africa
 A republic. middle income, emerging market
with natural resources and modern amenities.
 Social disparity is apparent.
 The Labour Relations Act of 1995 does not
distinguish union and non-union workers.
− “unfair labor practice” applies to the individual.

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South Africa
 21-day annual leave.
 12 paid holidays.
 Sick leave available up to a
30-day maximum.
 Female workers are entitled
to four months of unpaid
maternity leave.
Protection Benefits
 State pensions are available
but payout is modest.
 Many private medical plans
exist and employers who
offer plans expect an equal
employee contribution.

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Australia
 A federal parliamentary democracy.
 Economy fueled by high export prices.
 Large employers must follow employment
regulations from the 2005 Work Choices Act.
 50% of all workers are employed under awards
made by the
− Australian Industrial Relations Commission.

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Australia
 Full-time employees get up
to 10 days of paid leave.
 Up to 52 weeks of unpaid
parental leave exists for
permanent employees.
 Paid maternity and paternity
leave maximums are 18
weeks.
Protection Benefits
 Employers and employees
contribute to the
government pension.
 Workers’ medical benefits
include free care by staff
doctors in public hospitals.
− Private benefit organizations
exist for private care.
− Prescriptions are costly.

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Summary
 Chapter twelve examined paid time-off and
protection benefits in countries on various
continents, including:
− North America,
− South America,
− Europe,
− Asia,
− Africa, and
− Australia.

HR 205 Ch12 martocchio 6e

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