Greece joined the European currency in 2001 and embarked on what has now been recognised as its 'decade of overspending'.
This September, it was almost forced out of the Eurozone due to its rising debts - threatening to peak at 180% of GDP by 2020. And despite a bailout equating to £95 billion in 2010 and ongoing plans to reduce Greece's deficit, commentators and economists are still concerned Greece will be the first country to default, returning to the drachma. They fear this, in turn, could lead to a domino effect on Italy (which has the highest debts in the Eurozone) and France (the country most exposed to the turbulence in Greek banks).
As HR magazine went to press, the EU was reeling from the resignation of Greek prime minister George Papandreou, shortly followed by that of Italian leader, Silvio Berlusconi. But by December, when you read this, it may all have changed again.
Germany is, at present, the most prosperous country in the Eurozone, reporting GDP growth of 3.6% last year. This explains why its chancellor Angela Merkel has been at loggerheads with French president Nicolas Sarkozy on lending money to the more troubled states.
The UK, while not part of the single currency, has its own austerity measures in place (remember 600,000 job losses in the public sector?), but has not been immune from dilemmas on the other side of the channel. The volatile nature of the FTSE 100 over the past few months demonstrates that.
But from an HR perspective, and especially in the field of reward and employee benefits, the uncertainty facing both the Eurozone and indeed the European Union, is likely to cause waves for UK employers with staff in mainland Europe.
Jonathan Underwood, managing consultant at reward advisory firm Thomsons Online Benefits, explains: "The EU is a small part of a global economy and is subject to massive international influences. The Japanese tsunami, events in Libya and the death of Osama Bin Laden had an impact on Europe. But even across Europe, time differences, currency, language and culture can make having a pan-European benefits strategy difficult."
In the HR Reward Survey 2011, sponsored by Vebnet and Standard Life, HR directors and benefits chiefs with a global remit said local regulation and legislation was their biggest concern (see Graph 4), with almost two-thirds (62%) citing this as a reward worry. Some 37% cited 'complexity of benefits management' as a concern, compared to a slightly lower 31% concerned about costs.
Nigel Sullivan, HRD at telco Talk Talk, explains: "For most organisations, an enormous amount of thinking goes into the design, benchmarking and technical execution of a range of employee benefits. Some of this is driven by legislative changes that are often localised, a company's desire for harmonisation and consistency, or by fads driven out of the consultancy world dreaming up new products to sell."
Underwood explains: "Technical integration across Europe is a factor for harmonisation of benefits - especially with data storage. The French equivalent of national insurance numbers, for example, are not permitted to be stored outside France, which will cause a problem when providing benefits or salaries." The motivations of employee groups in different countries can have an impact, either negative or positive, on the perks they provide, he says.
"Germany has great national health provision," he says. "So German staff are less likely to be concerned with getting private medical insurance. In Norway, employees are keen to have a good work-life balance, so will want more holiday."
According to consultancy Mercer's pan-European healthcare research, UK employers spend on average 2.7% of their total payroll costs on healthcare provision for employees, lagging behind employers in Italy (3.1%), France (3.1%) and Spain (3.3%).
Anne Bennett, senior associate in Mercer's international retirement team, takes the argument one step further - that as austerity measures are heightened across the more troubled EU countries, pressure will be put on employers to provide benefits, until now provided by the state. She explains: "Countries such as Greece, Spain, Portugal and Italy that had rich social security provision are going to need to cut them back on an ongoing basis as part of austerity measures. For pensions, this will mean auto-enrolment into schemes or mandatory employer contributions."
In Norway, for example, it has been mandatory for employers to contribute to staff pensions since 2006/7. This has ended up causing employers unnecessary administration and complexity since implementation - some of which the UK may well face when its employers are legally obliged to auto-enrol staff into pensions from the end of 2012.
The Irish Republic's social protection minister, Joan Burton, has announced definite plans to launch a pensions auto-enrolment system there. In unionised countries around Europe, a trend is developing for semi-mandatory pension schemes, where employers guarantee with trade unions how much they will agree to contribute to employees for their retirement arrangements.
Spain, on the other hand, has traditionally low levels of employer-provided retirement income, but the tide looks set to change.
László Andor, European commissioner for employment, social affairs and inclusion, addressed delegates at the National Association of Pension Funds (NAPF) conference in Manchester in October. He said: "Pensions are important for securing retirement incomes plus public finance. The European Union has an important part to play. It is a matter of common concern in the EU. We have launched a green paper towards adequate, sustainable and safe pensions and a white paper is due to be published in a couple of weeks.
"The EU has a long-term strategy for growth and jobs and this involves a higher effective retirement age. State pensions are declining in generosity across Europe - and I think it is time for sharing of good advice. I plan to highlight these aspects, among others, to policymakers."
Despite Andor's pledge, as HR magazine was going to press, this pensions white paper had yet to be published, although European pensions experts expect its arrival before the end of this year. Leaked documents have highlighted the importance of pensions sustainability and that EU citizens should have 'more insight', according to Pensioenfederatie, the Dutch Pension Federation.
Staying with the Netherlands, Eric Bergamin, a partner at Dutch employment law firm Bergamin & Gielink, explains: "We know there will be more EU legislation and we are desperately awaiting the white paper.
"This will be a good thing, because it will give employers across Europe more explanation and European pensions will be executed by one supervisor - it will make it easier for employers to have cross-border pension schemes.
"I hope legislation will speed up the process in dealing with ageing populations and longevity across Europe."
But Mercer's Bennett is not so optimistic. "These rules would make it difficult for an EU pensions strategy - I think they will be trundled out over the next few years and these things do tend to get put on hold."
In October, the European Insurance and Occupational Pensions Authority (EIOPA) issued for consultation a draft of its second response to the European Commission's Call for Advice on its review of the Institutions for Occupational Retirement Provision (IORP) directive.
In a nutshell, the EU plans to apply its Insurance Solvency II directive to pensions, which could risk undermining defined benefit final salary pensions - a branch of retirement saving already under significant pressure in the UK. According to the NAPF, the new proposals, if implemented, could accelerate the closure of this type of scheme. But, in addition, if companies are required to put more money into pensions, they might have fewer resources for investments, including creating jobs. So what are the options for HR directors with a pan-European reward remit?
"Wait and see before implementing a pension plan," says Bennett. "Keep an eye on the changes and maintain an attitude of flexibility."
Mercer's research shows a third of employers (32%) across Europe are investigating the option of launching common policies and strategies across the various jurisdictions, with 19% using multinational pooling initiatives.
Put simply, international or multinational pooling means using one provider to give a single quote for group benefits across borders, thus achieving economies of scale - but, as Underwood points out, there are few providers that can offer cover across the EU and configuration of different currencies can become an issue here.
David Plink, COO at independent HR assessment organisation, the CRF Institute, has carried out annual research of the companies ranking highly on the Top Employers lists.
He explains: "It is extremely hard to compare countries by salary - but across Europe we have seen primary benefits such as salary and pensions remain fairly stable between 2010 and 2011. In 2011, 82% of employers offered a pension scheme, compared to 81% in 2010 and 80% in 2009 and this year 74% of European top employers made their schemes available to all staff."
For the moment at least, the employee benefits landscape across Europe is in a state of flux, waiting for decisions, announcements and developments to gain momentum, leading to permanent - and inevitable - changes.
