Pensions innovation rife in Eastern Europe
10.6.08

Creative thinking when it comes to pensions and benefit provision is rife in Central and Eastern Europe (CEE) among employers keen to attract and retain an evermore demanding workforce.

The latest editions of Watson Wyatt’s annual reports on employee benefits and employment terms and conditions for CEE reveal that companies are having to differentiate themselves by developing the use of non-cash benefits, including flexible benefit packages, in order to meet the demands of skilled personnel of which there is a shortage.

John Swabey, head of HCG Consulting, emerging markets at Watson Wyatt, said: “People are trying to be creative in order to make the best they can out of the situation - for example increasingly offering flex - the emphasis also being on how they communicate what they are offering as employers. They need a good communications policy around their reward packages.”

The reports also highlight the wide diversity of pension provision in the area, according to Karin Bogart, a consultant at Watson Wyatt and editor of one of the reports. “The countries are in no way a homogeneous group, since their political, economic and social histories vary greatly. Although all - except for Russia - are aligning their legislation to EU Directives and Regulations, numerous disparities still exist.”

For example, Hungary has a five-pillar pension system in place while the Czech Republic has introduced a two-pillar system – a state operated PAYG system and a voluntary fully funded private pension scheme. The second pillar is still not yet operational.

Bogart added: “This wide diversity observed around benefits is also evident as far as employment terms and conditions are concerned. For example, the influence of trade unions and collective bargaining varies considerably from one country to another in Central and Eastern Europe. Works Councils are not mandatory in some countries and where the law has provided for employee representation, works councils take different forms to Western Europe.”

The Watson Wyatt reports offer up-to-date information on employee benefits and employment terms and conditions in 13 countries – Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia and Turkey.

They are available from Watson Wyatt Data Services (email customerservice@watsonwyatt.com) for €1,850 each. The price includes four newsletters a year which provide an on-going update on the latest legislative developments and trends.