June 28, 2019
20 attendees from 16 companies. Most persons on the call were either based in country or region. A few attendees worked out of corporate headquarters.
Companies on the call came from the following industry sectors: automotive, biomedical, chemical, consumer product, financial services, food products, manufacturing, media, pharmaceutical, retail, telecommunications and technology.
Purpose of Meeting
The Global Business Group on Health (Global Forum) sponsored a 60-minute member conversation about health and benefits in Argentina. Call content was driven by attendees based on corporate challenges and/or priorities.
Argentina’s economy has contracted 6.2%.1 It is the worst recession since the 2008-2009 global recession.1 While most Global Forum employers have not made any changes to mitigate the recession, some employers have had to make adjustments during the economic downturn (Figure 1).
Inflation is a significant challenge in Argentina. In 2019, inflation is estimated to be almost 36%.2 Medical inflation and salary increases were estimated to be 25% and 27% respectively.3,4 To combat the hyperinflation and the recession impact, employers are considering two benefits (meal vouchers/allowance and international savings plans) and reviewing allowances more than once a year. Please note that companies are required to pay compensation in Argentinian Pesos. One company sets their executive and expatriates pay in U.S. Dollars and converts it to Pesos.
As part of their holistic well-being strategy, a couple of employers are considering adding meal vouchers/allowance to ensure employees are able to eat a meal while at work during this tumultuous economic period. One company was advised by their consultant that while meal vouchers is not a market benefit, they are increasing in prevalence. This company has decided to wait to see how the trend continues. Companies are also considering the legal implications. Once the benefit is offered it is legally challenging to remove it. One company used to have meal vouchers, and they were successful in removing them by offering employees a compensation buyout. However, now they are considering reintroducing them. Another company offers a meal allowance. Please note that meal vouchers/allowances are taxable.
Employers are implementing international savings plans to provide income protection in a country struggling with hyperinflation fluctuations. One company offers this benefit as a global standard. The plan is currently in 12 countries and expanding to an additional 26 locations (38 in total). While the benefit is global, the company has 10-12 plan designs that are unique for each country based on local needs and regulations. The company does try to consolidate plan design where possible and plans to use existing plan designs in its new country roll outs if feasible. If market practice allows, the company requires employee contributions to the plan. The company match also varies based on market practice. If the market practice’s matching contribution is too small, the company defines its own match as part of its global standard. For example, the match varies with some countries at 100% and at the highest a country having 170% match. Employees in Argentina are now getting 167% match. The plan is officially based in the Isle of Man and the currency is the U.S. Dollar. U.S. citizens are not allowed to participate in the plan due to ERISA regulatory issues. Another company has an international savings plan where the company provides stock to employees as its company match. A third employer is considering an international savings plan.
Two employers are reviewing and increasing their allowances twice a year to account for Argentina’s hyperinflation. Allowances companies mentioned include meal, car, fuel and education reimbursement. The increases tend to be small, but the companies try to accommodate employees during this challenging economic environment.
Members discussed their approach to medical benefits for employees and retirees. One company is reviewing its current offering with one provider and is looking to add additional options to promote employee choice. Two employers discussed how they provide retirees access to medical: one has them integrated in with their active employees while the other has a separate benefit for this population. Other companies are concerned with how to handle retirees in the future. There is lack of clarity in some SOWs regarding retirees.
Companies discussed their mental health efforts in context of their holistic well-being strategy. Six employers shared what mental health services they provide. Those benefits include:
- Counseling services (5 employers),
- Prescription drugs (4 employers),
- Outpatient services (3 employers), and
- Inpatient services (2 employers).
5 employers provide an EAP. Given the prevalence of psychologists in Buenos Aires, the EAP makes a referral to the medical plan for the employee to continue treatment after the allotted number of sessions are exhausted. In Argentina, people are very open with talking about different issues and stress. Those on the call indicated that it is not uncommon for people in Argentina to go to a psychologist, and that medical coverage includes these services. They attributed this as helping with the stigma.
Companies have focused on work-life benefits. Two companies talked about their priority is to provide employees flexibility in working hours and the ability to work remotely. One company is reviewing its vacation time policies at this time. Another company is exploring how to provide daycare services for its unionized, hourly male employees. Its female hourly employees have access to this benefit via collective bargaining. It wants to ensure equal access. A member was working on how to provide work-life benefits and well-being initiatives effectively for its unionized workforce.
More TopicsArticles & Guides Americas
- 1 | Gillespie P. Argentine Economy Shrinks the Most Since Global Financial Crisis. Bloomberg. March 21, 2019. https://www.bloomberg.com/news/articles/2019-03-21/argentine-economy-shrinks-the-most-since-global-financial-crisis. Accessed May 13, 2019.
- 2 | Raszewski E, Sherwood D, and Craft D. Argentina 2019 Inflation Forecast Jumps to 36 percent: Central Bank Poll. Reuters. April 3, 2019. https://www.reuters.com/article/us-argentina-economy/argentina-2019-inflation-forecast-jumps-to-36-percent-central-bank-poll-idUSKCN1RF2TR. Accessed May 22, 2019.
- 3 | Aon. 2019 Global Medical Trend Rates Report. https://www.aon.com/getmedia/0c375f10-3b16-4d2d-a452-4ae86968525b/2019-Global-Medical-Trend-Report.pdf.aspx. Accessed March 12, 2019.
- 4 | Korn Ferry. 2019 Salary Forecast: Smaller Real Wage Increases Across Most Parts of the World. https://engage.kornferry.com/Global/FileLib/Pay/KF_2019_Salary_Forecast_Main_Infographic_Aw.pdf. Accessed May 22, 2019.
- 5 | U.S. Central Intelligence Agency. The World Factbook. May 7, 2019. https://www.cia.gov/library/publications/the-world-factbook/geos/ar.html. Accessed May 20, 2019.