Today, most employee benefits plans incorporate a set of complementary non-wage perks that have become a key component of the overall total compensation package. In fact, a company’s benefits offering often serves as a reflection of its own core values — especially in Europe, where market forces have been pushing the notion of compensation in some exciting new directions. 

For instance, if a company prioritizes employee wellbeing, offering earnest health and wellness benefits could help reinforce that commitment, such as gym memberships, mental health support, and nutritional guidance. Or if a company places importance on ongoing learning and development, employers may provide support through educational assistance, training initiatives, or avenues for professional growth.

Naturally, benefits packages serve as a guide for job seekers to quickly gauge a company’s ethos, and play a significant role in attracting top talent that aligns with those values. In fact, employee benefits have become one of the most influential decision factors for job applicants. Morgan McKinley found that in 2023, 43% of businesses struggled to attract new talent because they couldn’t compete on pay and benefits.

Why Europe is looking beyond wages and toward total compensation

The importance of employee perks has never been more apparent, particularly amidst the continued wage stagnation across Europe. As of the first quarter of 2023, 22 out of the 24 countries in Europe experienced a decrease in hourly wages compared to the previous year. According to Reuters, this was the third consecutive year that wages fell behind inflation on the continent. The Guardian recently reported that for the past 15 years, wages in the UK have been stagnant, resulting in workers now facing a yearly income gap of GBP 11,000. 

Yet, there is a silver lining to this epidemic of flat wages. Companies have reacted by turning to benefits to soften the blow of dented salaries and pay raises. This is because companies that offer solid benefits can boost employee morale and retention rates. Even with a steady salary, an excellent benefits package can help demonstrate a company’s commitment to putting employees first and creates a positive workplace that encourages people to stick around.

Europe’s exceptional mandatory benefits

Employees in Europe enjoy several work-related perks, like flexible schedules, health coverage, retirement plans, and paid time off. For example, France, the UK, Austria, Denmark, Finland, Norway, Spain, and Sweden all offer 25 or more paid vacation days per year. Additional benefits such as life insurance, disability protection, critical illness coverage, private medical insurance, dental insurance, and more are also offered. However, the statutory benefits in each country of course vary.

For instance, in Luxembourg, companies must pay sick leave workers their full salary for 77 days. In the Netherlands, employees are entitled to a holiday allowance of at least 8% of their salary. Meanwhile, in France, there’s a “right to disconnect” law, meaning employers may not sanction workers who don’t respond to calls, emails, or texts that are sent outside of working hours. As European workers are afforded a great amount of mandatory benefits by law, employers must go above and beyond to attract top talent by offering other sought-after perks.

Map of Europe exceptional benefits and work-life balance

Europe’s work-life balance culture leads the world.

Europe has developed a blueprint that stretches far beyond salary and can serve as a template for companies all over the world looking to attract and retain skilled talent. So, what are some of these enticing employee perks that reel in top talent in Europe? G-P’s 2023 Global Growth Report delved into the specific preferences of global workers to better understand what employees expect from their employers.

Our research found that workers in France and the Netherlands were motivated by better pay and benefits as well as enhanced opportunities to acquire new personal skills. Workers in Germany also wanted to develop new skills while having the potential for greater flexibility. Meanwhile, workers in the UK sought better pay and benefits alongside greater flexibility. When the surface across the continent is scratched, flexibility is revealed as the key mineral.

That is because when it comes to work-life balance, Europe-based workers clearly have the upper hand compared to their global colleagues. For example, according to a 2022 report by the International Labor Organization, Europe ranks last in average hours worked per week. Eastern European workers clock in 39 hours per week, while their Southern, Northern, and Western counterparts work 37.9 hours per week. This is nearly 10 hours less than workers in Asia Pacific, who clock in 47.4 hours per week. In addition to that, European countries regularly dominate OECD rankings for work-life balance.

Real-world benefits: Europe vs. the U.S.

Now that Europe has gone down this path of benefits skewed toward work-life balance, what’s the story in other regions? Littler, the largest law practice in the world focused on labor and employment law, recently carried out individual surveys to analyze commonalities and differences between employers in the U.S. and employers in Europe.

While the surveys discovered that workers in the U.S. and Europe were on par when it came to physical health conditions, 65% of U.S.-based employers reported an increase in mental health requests from their workforce. This was 26% higher than their European counterparts. The relationship between worker wellbeing and burnout is closely intertwined, each exerting a substantial impact on the other.

This view is endorsed by a 2023 survey carried out by the U.S. think-tank Future Forum. They found that 42% of 10,243 global workers experienced burnout, the highest since May 2021. Some leading causes were persistent heavy workloads and prolonged overworking, telltale signs of work-life instability.

In direct response to this phenomenon, a growing number of US.-based Gen Z workers are moving to Europe to pursue their version of the “American Dream” via European work culture. The main reasons cited are perks such as longer lunch breaks, more vacation days, and less pressure to respond to emails past 5 p.m.

How Europe is continuing to evolve traditional work models

Furthermore, Europe continues to lead the ultimate evolution of work flexibility ─ the push for a four-day workweek. From 2015 to 2019, Iceland initiated a testing phase for a shorter workweek. Hours were reduced from 40 to 35 or 36 without cutting pay.

The trial was considered a success, showing that the four-day workweek reduced stress and burnout while improving work-life balance. As a result, trade unions in Iceland negotiated a permanent reduction in working hours, and almost 90% of the workforce scaled back their working hours or were presented with other flexible arrangements.

In 2022, similar success was found through a UK version of the experiment. Of the 61 participating companies, 56 continued with the four-day week. Moreover, before-and-after data showed that 39% of employees were less stressed, and 71% had reduced levels of burnout at the end of the trial.

These findings seem to be ricocheting across Europe. In November 2022, Belgium introduced a new law allowing employees to decide whether to work four or five days a week without a salary decrease. Other countries like Spain, Portugal, and Germany are all following suit.

Create competitive benefits packages with G-P.

As more companies continue to expand globally and explore new models of work, creating a competitive benefits package is key to attract and retain skilled talent. And when it comes to navigating the journey of global compensation, nobody is as experienced as G-P.

As the recognized leader in the global employment market and standard bearer for industry compliance, we continue to pave the way with new technology for new times. With the #1 Global Growth Platform™ helps companies plan, hire, and manage global teams in 180+ countries quickly and compliantly. Our technology allows you to view available benefits by country — both mandatory and supplementary — making it easy to offer your global teams competitive and up-to-date benefits that meet the rules and norms of the countries you’re hiring in. Beat the competition and grow globally today.

 Contact us or request a proposal to learn more about our platform.

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