IF YOU could choose the ideal remuneration system for a country, it probably would be one where salary and state benefits are high and income tax and social security taxes are low. Regrettably, such a Utopia does not exist, certainly not according to the latest Sedgwick Noble Lowndes Guide to Employee Benefits and Labour Law in Europe 1996/97 which reviews the law and practices for employment benefits in 22 European countries, plus Japan and the US.
Anyone moving to any of these countries should be interested in the analysis of employers benefit costs, earning replacement levels at retirement, vesting provisions and early retirement ages.
The high cost of social security benefits in Europe - the average employer pays 30 per cent of gross pay in compulsory benefit contributions - means that the European cost structure is three times higher than that of the US, Japan and the emerging economies of the Far East. Europe's ageing population also means that those in employment are facing an increasing "burden of providing benefits for an increasing number of people in retirement. Benefits must be reduced or taxes and contributions increased - or both," says David Formosa of Sedgwick Noble Lowndes.
In certain European states, like Britain and Ireland, where state pension benefits are relatively low already and where social security contributions keep increasing, the demographic time bomb, when it goes off may not be as shattering as it will be in countries where contributions have traditionally been lower and benefits higher - like in Italy and France.
The report provides a comparative snapshot of the position of the 22 European countries, Japan and the US on everything from the percentage of pension to earnings, retirement ages, holidays, maternity benefits, and levels of taxes and deductions for employees and employers. As the accompanying chart (figure 1) shows, the Scandinavian countries prefer to levy income taxes rather than mandatory or voluntary contributions to meet their social security obligations, whereas countries like France, Greece, Portugal and Japan keep the proportion of income tax low and mandatory contributions high.
Holiday entitlements also produce an interesting picture for the aspiring emigrant (figure 2). German workers typically enjoy over 40 days off a year, while the Americans are lucky if they get 20. The chart contradicts the commonly held view that the Japanese have few holidays. They not only enjoy the greatest number of public holidays - 15 - but, are entitled to a total of 35 days off a year. Only Italy, Britain and the US do not provide statutory holidays; instead, such days off are subject to local agreements.
Finally, if you are choosing a country to live in based on the amount of maternity leave available, no one beats the Swedes and Hungarians, who give new mothers 52 weeks of statutory maternity benefits. By contrast, the United States has no statutory, national maternity leave.
The Sedgwick Noble Lowndes, Guide to Employee Benefits and Labour Law in Europe with Japan and the USA 1996/97, is available from Lorraine Robinson, Sedgwick Noble Lowndes, P/O Box 144, Croydon, Surrey, CR9 3EB, Telephone 0044 181 6668134. Cost £45.
