Features: January 27th, 2004

Recruitment and Retention  – Will Employee Benefits Help?

By Jill Gardiner

Recruitment and retention is now a major concern for local authorities and other public sector bodies. From a peak of 7.5 million in 1979, the number of public sector employees dropped to less than five million by 1998 and it continues to fall.

The private sector accounts for more than 80% of total jobs and the attractive benefits that many employees in this sector are offered mean that the public sector is under great pressure to compete. Couple this with the pressure of Central Government’s aim to increase recruitment levels in the public sector over the next five years and it paints a bleak picture for Chief Executives and HR Directors.

However, pay packages in the public sector are improving with pay rising 4.6 per cent in the year to December 2003 compared with 3.5 per cent in the private sector. But there is still a long way to go. A large majority of private sector workers benefit from well developed benefits packages including gym discounts, company cars and private medical insurance (PMI) creating a un-level playing field in which the public sector cannot compete.

The modern day job market

The current job market is buoyant but it is private sector companies that are experiencing the benefits. The public sector is still finding it difficult to recruit despite the pay increase. Even the traditionally attractive 6% contributory pension scheme offered to public sector workers is losing its appeal.

In addition the perception of having a job for life in a public sector role no longer exists. In the past there was a clear distinction between private and public sector employees and rarely would they stray from their sectors. Indeed public sector organisations only looked for employees from other areas of the public sector. Chief Executives now have to be more flexible and more creative in their recruitment policies, particularly as the older generation of public sector workers retire and more of the younger generation are required.

The trend for the younger generation of workers is to shift from job to job and this is becoming a norm of society. It is now typical to flit between the two sectors and employees are not as pigeon-holed into public or private work as they were in the past, making retention of employees more and more difficult.

The blurring of Private vs Public sector

To some extent the increase in the number of public and private sector partnerships has blurred the lines between the two sectors. Some partnerships second people from the private sector into the public sector and vice versa. To ensure a smooth secondment, senior managers offer the same employment packages and this contributes to a rise in expectations of working conditions and remuneration in both sectors.

Benefit provision could be the answer

In order for the public sector to compete with its rival and recruit the best candidates, it is necessary for Chief Executives to consider enhancing the package they offer staff to make it more attractive. The addition of an employee benefit is just one of these enhancements. However, there are obvious hurdles to overcome, cost being a prime one of them and benefits such as company cars and gym discounts are not often particularly cost effective. However, the provision of healthcare is one option that can benefit both employer and employee. Healthcare is also of particular appeal to the public sector given the fact that sickness and absence rates are twice the national average. Providing healthcare support when employees are ill can help to reduce the number of days taken off sick.

There are obviously many complex reasons for why the absence rates are so high in the public sector. However, one main factor is the agreements made with unions that defend people’s rights to take sickness and to be allowed to take as long as necessary to recover before returning to work. Because such union agreements exist workers are not under as much pressure to return to work and are more likely to take a day off if they are ill. They are also more likely to take longer off work to recover. To some extent public sector managers’ hands are tied with such agreements and are limited in their power to address the number of days taken off sick. As a result public sector managers are not so keen to monitor sick leave but healthcare provision can help with this.

While the benefits of healthcare are clear, traditional PMI is usually far too costly for public sector organisations to justify. It also conflicts with the philosophy of the NHS and the fact that public sector organisations should support state healthcare provision. So what is the solution?

A mutual friendly society dedicated to the needs of the public sector and sensitive to the political pressures that exist in the public sector is probably the best option. Benenden Healthcare is one such organisation that has existed for 100 years.

Benenden consists of a society of members from all aspects of the public sector such as local authorities, civil servants, the post office, various approved public sector bodies and teaching. Benenden acts as a complementary service to the NHS by providing its UK members with specialist treatment or care when the NHS is unable to deal with a medical complaint within a reasonable timescale. This means that members can get better more quickly and reduce their length of absence from work.

Benenden members pay just 95pence per week and in return the society provides financial support from the fund, as well as advice and guidance. . This differs to the traditional Private Medical Insurance (PMI) policies which provide ‘defined’ benefits i.e. if a person has a particular illness or problem the amount PMI providers pay out is fixed with tied conditions. The price paid rarely adjusts according to each person’s requirement.

The difference with mutual friendly societies designed for the public sector is that because they are not PMI they can provide flexible benefits tailored to meet member’s needs and there is no limit to the number of times that a member can ask for help.

Is healthcare provision the best benefit?

For a Chief Executive to implement such a healthcare benefit, it is worth first, taking a look at his or her peers to see what they are doing and offering to employees. Obviously a business case needs to be prepared illustrating the savings that can be made and the benefits of such a scheme. A number of local authorities have pioneered mutual healthcare membership, making it easier for others to justify their case.


Healthcare provision is a benefit to all and signifies how much an organisation cares for the wellbeing of future and current employees. Local authorities are starting to reap the benefits of specialised healthcare schemes dedicated to the public sector and it has proved cost-effective and worthwhile. Chief Executives and other areas of the public sector should feel encouraged by their success and inspired to provide such a benefit for the future health of public sector recruitment and retention.

Jill Gardiner is with the Benenden Healthcare Society. The Society membership scheme is not an insured product. The benefits are provided on a discretionary basis and are not guaranteed. Support is provided to assist people who are finding it hard to solve a health problem via the NHS and who do not have conventional private medical insurance.

More information about the Society is available at http://www.benenden.org.uk Or by telephone at: 0870 7545 731.