The economic crisis caused by the outbreak of COVID-19 has seriously impacted our business fabric and we are beginning to see its effects on the labour market. According to the latest data from the Ministry of Labour and Social Economy, the Social Security system lost 947,896 affiliates between 12 March and the end of April. This is basically due to the fact that many companies, especially SMEs, have had to suspend their operations due to the state of alarm.
After more than two months of lockdown, the de-escalation phase has begun, and there seems to be some light at the end of the tunnel. In this new scenario, companies must reinvent themselves and offer employees new options to complement their salaries, as well as adopting different strategies to attract and retain talent. Among the measures that companies could introduce, flexible remuneration programmes will play a key role. The number of companies introducing such initiatives has been growing and today they constitute a significant aspect of any pay negotiations.
The main advantage of this kind of remuneration in kind is that it has tax benefits, thanks to which employees can include the services they need as part of their salary and reduce their final tax bill. The flexibility of such schemes means that employees can allocate part of their gross salary to the purchase of products that are free from tax, such as nursery schools, restaurant vouchers, medical insurance or transport allowances, training, etc.
Consequently, when companies are operating as part of the “new normal” they will be able to increase the net salaries of the workforce without increasing costs. This is a valuable asset when negotiating, especially for those organisations which, in these difficult times, do not have the capacity to increase their employees’ remuneration.
Better corporate image and reputation
The company’s image and reputation also benefit from applying a flexible remuneration programme, because it consolidates the brand as a benchmark in its sector, not only in comparison with competitors but also as seen by its own employees. The motivation of workers can increase if they perceive that the company is responding to their demands, and this has a direct impact on their productivity and commitment to the organisation.
Employees’ quality of life
Employees are also suffering the consequences of this health crisis, and from their point of view remuneration in kind can mean an increase in their ability to decide on the composition of their salary, as it can be adapted to their needs and offers tax benefits that increase their purchasing power. This is a flexible, convenient measure that can be adapted to employees’ personal circumstances at different times.
It is undoubtedly essential for employees to be satisfied with their economic conditions, but improving their quality of life through elements such as a flexible remuneration programme is a good way to establish a balance and adapt employment to the needs of today’s society.