Despite inflation, many small business employees say health benefits are more important than pay increases
In a new study conducted by Blue Cross, health benefits have emerged as a top choice for small business employees. The ‘2023 Blue Cross Small Business Benefits Study,’ which surveyed over 2,000 decision-makers and employees in Canadian small businesses with fewer than 100 employees, found a preference for health benefits over monetary raises.
The findings indicate that when given the choice between a salary increase or access to health benefits, nearly half (49%) of employees opted for health benefits. More than a third (36%) stated a preference for health benefits even over a substantial $40,000 raise.
“Despite the financial challenges Canadians have faced this year, health remains a top priority,” said Tim Bishop, managing director at Blue Cross. “These findings were unexpected during times of high inflation and reinforce the inherent value Canadians place on health benefits.”
Cost hurdles
While the study revealed that cost remains a hurdle for many small businesses in offering health benefits (cited by 39% of respondents), the average cost per employee annually was found to be just $1,822. This expenditure was seen as providing a substantial return on investment across various performance metrics, including recruitment, retention, and productivity.
The preference for health benefits remained strong even when the proposed salary increases far exceeded the cost of the health plan.
For instance, 41% of employees expressed a preference for health benefits over a $25,000 raise, and 50% favored health benefits plans over a $10,000 raise, highlighting the perceived value of health plans.
Employees look for health benefits
The study found that 80% of employees consider a company's health benefits when considering a new job offer. Additionally, 73% of employees with health benefits would choose to stay with their current employer, even if offered a higher salary elsewhere.
The absence of health benefits can pose risks for small businesses too, with 76% of employees without health benefits stating they would leave their current job for one with a better health benefits plan.
Moreover, over 160,000 small businesses in Canada, equivalent to 1 in 8, have witnessed at least one employee resign for the sake of better health benefits. Businesses without health benefits are also susceptible to decreased employee productivity (21%) and falling behind competitors (19%).
“To remain competitive in an ever-evolving employment landscape, small businesses must deliver value to retain team members,” Bishop said.
“More than half of employees feel underappreciated in the workplace and nearly one-quarter are actively searching for other job opportunities. Providing benefits can help mitigate quiet quitting and keep employees satisfied and engaged at work.”
A win for employers and employees
Most Canadian small businesses (72%) offer benefits to their employees, recognizing the positive impact of comprehensive health benefits plans on both employers and employees.
91% of employees valued their benefits plan's impact on their overall health and wellbeing, while 89% deemed their benefits plan important for their financial health and security. Peace of mind (37%) emerged as the top reason why employees appreciate health benefits.
“As inflation and affordability concerns remain top of mind, Canadians are seeking stability and security,” Bishop said. “Offering health benefits can foster a healthier, more engaged workforce and provide employees with the reassurance that their health and the health of their loved ones is covered.”
