Global Trends in Employee Benefits American Benefits Institute and Aon Hewitt Global Benefit Governance

  • View
    0

  • Download
    0

Embed Size (px)

Text of Global Trends in Employee Benefits American Benefits Institute and Aon Hewitt Global Benefit...

  • Global Trends in Employee Benefits Management

    Presented by Wil Gaitan Senior Vice President – Aon Hewitt June 1, 2017

  • Content

     Introduction

     Global Socioeconomic Background

     Global Factors Influencing Global Benefit Trends

     Highlights of Aon Hewitt 2017 Global Medical Trend Rate Study

     American Benefits Institute and Aon Hewitt Global Benefit Governance Study

     Open Forum

     Appendix

    1

  • Introduction

  • Global Socioeconomic Background

  • A Historical Perspective of Global Economic Change

    US vs. UK - 1850

    Population and GDP

    23 28

    50

    60

    0

    10

    20

    30

    40

    50

    60

    70

    US

    Population (millions) GDP (billions, 2000 constant dollars)

    UK

    US vs. UK - 1950

    Population and GDP

    150 50

    2,006

    316

    0

    500

    1,000

    1,500

    2,000

    2,500

    US

    Population (millions) GDP (billions, 2000 constant dollars)

    UK

    4

  • 21st Century

    US vs. China - 2010

    Population and GDP

    308 1,390

    14,660

    5,878

    0

    2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    14,000

    16,000

    US

    Population (millions) GDP (billions, 2010 constant dollars)

    China

    US vs. China - 2050

    Population and GDP

    420 1,550

    38,514

    70,710

    0

    10,000

    20,000

    30,000

    40,000

    50,000

    60,000

    70,000

    80,000

    US

    Population (millions) GDP (billions, 2006 constant dollars)

    China

    5

  • 2050 Top Economies

    6

    https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj19sbspbbTAhUGv48KHcnRClgQjRwIBw&url=https://www.statuecruises.com/&psig=AFQjCNE75F1rsOIYZaPPSVX29SGxT7n4-w&ust=1492889749319999 http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiq6diErrbTAhWo3YMKHU3nAO8QjRwIBw&url=http://www.coxandkingsusa.com/travel-destinations/asia-and-the-pacific/japan/&psig=AFQjCNGZRHEtO6vN1NQR6VEgp7qVBD9-rg&ust=1492891931712485

  • 2015 2050

    PPP

    Rank Country

    GDP

    (2015 USD bn) Country

    GDP

    ( USD bn*)

    1 China 19,392 China 61,079

    2 United States 17,947 India 42,205

    3 India 7,965 United States 41,384

    4 Japan 4,830 Indonesia 12,210

    5 Germany 3,841 Brazil 9,164

    6 Russia 3,718 Mexico 8,014

    7 Brazil 3,192 Japan 7,914

    8 Indonesia 2,842 Russia 7,575

    9 United Kingdom 2,679 Nigeria 7,345

    10 France 2,647 Germany 6,338

    11 Mexico 2,227 United

    Kingdom 5,744

    12 Italy 2,171 Saudi Arabia 5,488

    13 South Korea 1,849 France 5,207

    14 Saudi Arabia 1,683 Turkey 5,102

    15 Canada 1,632 Pakistan 4,253

    Global Economy Shift in Progress

    Sources: IMF (2015), PWC (2050)

    Emerging Market and Developing Economies

    Advanced Economies

    GDP Based on Share of World Total (%)

    7

  • Two Key Trends Among U.S. Multinationals

     Foreign affiliates of U.S. multinationals

    bringing in a higher percentage of net

    income relative to U.S. domestic

    business

     Multinational companies increasing

    investment and staff counts outside the

    USA

    8

  • 26

    North America

    Western Europe

    Japan & S. Korea 9

    Australia &

    New Zealand

    Other advanced

    1980 2013 profit % by region

    Advanced Emerging

    26

    25

    9

    3

    5

    China

    Latin America

    ASEAN 9

    India

    Other emerging

    14

    5

    1

    5

    6

    World Company Profits - Evolution and Geographical Distribution

    $2T profit

    7.6% of world GDP

    $7.2T profit

    9.8% of world GDP

    1980

    2013

    Net After Tax Profit

    SOURCE: McKinsey Global Institute: Playing to Win September 2015

     Companies from advanced economies earn more than two-thirds of global profits, and Western

    firms are the world’s most profitable.

     Profits are increasingly shifting from heavy industry to idea-intensive sectors

     Sectors such as pharmaceuticals, media, finance, and information technology have the highest

    margins

     Meanwhile, margins are being squeezed in capital-intensive industries

     Emerging economies now account for 40 percent of global revenue

    9

  • Growth of Corporate Profits Expected to Decline

    Global

    NOPLAT1

    profit pool by

    2025

    7.9%; $8.6

    trillion, in 2013

    dollars

    Source: World Bank; OECD;

    Bureau van Dijk; European

    Commission AMECO database;

    US Bureau of Economic

    Analysis; IHS; Oxford

    Economics; McKinsey

    Corporate Performance

    Analysis Tool; McKinsey Global

    Institute

    2013

    100% = $7.2 trillion Other

    Emerging 2

    5.2

    31.8 Emerging

    India 1.4

    ASEAN 4.9

    Latin America 5.7

    China 14.5

    Other

    Advanced 2

    5.3

    68.2 Advanced

    Australia and

    New Zealand

    2.2

    2.5

    Japan 6.7

    North America 26.4

    Western

    Europe 25.2

    2025

    100% = $8.6 trillion

    Other Emerging 2 5.3

    37.7 Emerging

    India 2.1

    ASEAN 2.4

    Latin America 6.8

    China 21.1

    Other Advanced 2 5.1

    62.3 Advanced

    Australia and

    New Zealand

    2

    1.7

    Japan 7.3

    North America 25.1

    Western Europe 21.1

    10

    1 Net operating profit less adjusted taxes.

    2 “Other advanced” refers to Hong Kong,

    Taiwan, and Middle Eastern countries;

    “other emerging” refers mainly to Russia,

    Eastern Europe, and Africa. NOTE:

    Numbers may not sum up due to rounding

  • World Corporate Profit Projections and Key Challenges

    A more competitive world A more uncertain environment and

    slower profit growth

    $8.6T profit

    7.9% of world GDP

    2025

    Many more companies fighting for market share

    Volatility and swings in corporate performance

    Profits shifting to idea-intensive sectors, which produce big winners

    Margin pressures on capital-intensive firms

    Emerging-

    market

    companies Tech and

    tech-enabled

    firms

    Small and

    Medium-sized

    Firms

    Rising cost

    and war for

    talent

    SOURCE: McKinsey Global Institute: Playing to Win September 2015

    11

  • Characteristics of Winning Firms - McKinsey

     McKinsey analysis of 20,000 companies indicates that winning firms differentiate

    themselves in three main ways:

    Pursuing fast-growing markets

    Build intellectual assets

    Efficient operations

     Especially in emerging markets despite initial difficulties

     Non-US profits of US companies have grown twice as fast as domestic

    1

    2

    3

     Investing in R&D and more idea-intensive products

     Building strong brands

     Lower production costs per unit of sales

     Efficiency is critical in order to sustain innovation over increasing competition

    SOURCE: McKinsey Global Institute: Playing to Win September 2015

    12

  • Global Factors Influencing Global Benefit Trends

  • Talent Sourcing in Emerging Markets – Challenges

    Source: 2017 Aon Global Risk Management Report

     Studies suggest

    multinational

    companies only find

    10-25% of new

    graduates employable

    and massive skill

    shortages for mid-

    level management

    positions

     India, Brazil, China,

    Mexico, S. Africa, and

    Turkey are all rated

    as having “severe”

    employability

    challenges by World

    Economic Forum

    Huge

    Talent

    Gaps

     Studies suggest only

    28.5% of Indians

    showed “high intent”

    of staying with current

    company (global is

    60%)

     Attrition is over 20%

    in China, 40% in

    Brazil

    Retention

    is Difficult

    14

  • Factors that Impair Staffing for Multinationals in Emerging Markets

    Source: McKinsey

     While the numbers of qualified staff are large, a multinational company would still find it

    hard to match its demand for talent with available local supply due to the three main

    factors:

    15

    1

    2

    3

    Limited suitability:

     Lack of language skills

View more