Despite notable differences in present levels of employee benefits amongst the largest European multinationals in the chemicals industry, there is increasing evidence that the major players are sitting up and taking notice of their peers in an increasingly competitive sector.

Andrew Haggart, principal and member of the global marketing team at consultants William M Mercer, who has looked extensively at employee benefit provisions in European multinationals, says one of the marked trends in the area is the interest groups are taking in their benefits and pensions on a more comparitive, global basis, as opposed to 10 years ago.

For starters, there is now a recognition that managing these issues from a central platform can achieve some global economies of scale. Across the board in the major industry sectors, such as the chemical field, companies are actively making themselves competitive in benefit terms. It's not quite at the US hands-on level yet, but it is certainly getting closer to the UK model, where companies are very active in their overseas operations, due to UK accounting standards," Haggart explains.

He believes the major US preoccupation at present in employee benefit provision for peer group competitive and comparative systems is starting to rub off on their European counterparts.

Commenting on current differences in social security and pensions provisions between European chemical multinationals, Haggart points to discrepancies such as the well developed first pillar pension provision in Italy, guaranteeing around 70-80% of final salary, or Germany, standing at around 40-45% of salary, down through France and Spain to the 'poor man' of Europe, the UK, with its low state benefit, as the backdrop to such varied figures. Much, he adds, also depends on the countries operated in and how schemes adapted to foreign subsidiaries of the group, dilute or increase the overall benefit figures.

The main issue facing most multinationals though, he notes, is the continuing retraction of social security provisions throughout Europe, forcing up costs and transferring the benefits burden on to employers and employees alike.

"With many companies, and particularly large multinationals looking to offset this increase by combining costly DB plans with DC arrangements, notably in Holland, Belgium and Germany; the interest for future employee benefits lies here. For example, DC pension schemes with portability arrangements can be a very attractive package when it comes to trying to attract the best employees in a competitive sector such as the chemical industry. There is certainly a small trend developing in comparison and development between market peers on this level," Haggart says.

Walter Schuster, responsible for global employee benefits at Hoechst, the German chemical and pharmacutical group, confirms this trend.

"At Hoechst, we have very close contact, certainly with other German multinationals like Bayer, BASF and Siemens, through which we compare the benefit and pensions packages of our subsidiaries outside Germany, to ensure they are competitive and adequate for company and employee," he says.

Schuster adds that Hoechst has carried out surveys of competitors in Ireland and Greece, where difficulties have arisen in inplementing the best scheme, confirming the company's policy of local decision making over a central company decree in such matters.

Commenting on the company's relatively high social security/ pensions costs, Gerhard Kantusch, director of human resources at Veitsch Radex, the Austrian industrial chemicals corporation, attributes this very much to the legacy of lofty contribution rates both domestically, and in Germany, where it has its key interests.

At present, he says, Veitsch Radex is examining closely the implementation of a pension fund system to replace current book reserve pension provisions, a system it hopes to have up and running within two years.

And according to Kantusch, the company's approach to employee benefits is very much the same for its operations in Italy, France and Spain.

"We don't really compare our employee benefits arrangements to other multinationals in the chemical sector, partly because we have no real problems with recruitment . However, the topic is particularly high on our agenda these days, because, as a result of recent mergers with groups such as Didier in Germany there is very much a process of globalisation happening here, so we must look cross-border, as well as considering such issues as mobile employees, etc," he says.

A spokesperson for Clariant, the Swiss specialist chemicals group, says recent company developments such as its Swiss venture with German chemical group Hoechst, has brought about the huge task of merging the group's employee benefits provisions.

As a result cross border compensation issues are very much at the fore at the moment, with the question of pensions following closely behind.

The spokesperson added:"As a well established Swiss company, we are certainly comparable in our employee benefits provisions to other Swiss groups in the chemicals sector, and I think if you look at salaries and benefits provisions we are certainly no lower than anyone else."

Franco Buretti, human resources and communications manager at Montedison, the Italian multi-sector chemical and life sciences group, says that with the company currently undergoing large restructuring, em-ployee benefit provision and its competitive implementation are ex-tremely high on the group's agenda.

However, he comments that for the most part this is done on local market and sector comparisons, as many of the company's branches operate in extremely varied countries and fields.

"In general, the problem of being competitive in employee remuneration and benefit is one of our major concerns. But only in the sectors such as agro-industry, engineering and pharmaceuticals, where we have a much more global operation might we consider looking to other multinationals for any kind of reference point. The same may apply to mobile employees, but employee benefits in this area are still very much defined by the necessary additions being made to local provisions to bring them to the correct level."

Buretti cites the specific example of Italy, where the group has increased its contributions to match the 4% level given to workers in the Fiat group, as an example of this local comparison. This, he adds, is one of the prime reasons behind what he considers as the fairly elevated employee benefit costs for 1997."

Topics