After financial services, one of the hardest hit sectors in the recession is construction. John Jory works in one that provides benefits for the other and yet is still upbeat...
Recession, recession, recession – as clichéd as it is quickly becoming to start an article talking about the current economic woes, there is no getting away from it in financial services, yet one sector hit hardest has been the building industry.
For John Jory, deputy chief executive of construction industry employee benefits specialists B&CE, the current situation has meant that his company has had to adjust the marketing approach for its new product, a cash plan for those in the construction industry, launched in alliance with Westfield Health.
“We’re not going out with all guns blazing. We started work on this new product twelve months ago but we are very mindful that it is a tough time out there and there’s a view that, during a depression or the times that we’re going through, that construction is the first to be hit and the last to recover. So I don’t think going all out is the right thing to do in trying to get employers to spend more money in difficult financial times. We are selling this if we perceive from employers that this is something they are thinking of providing – and a significant number of companies already do.”
B&CE is a decades-old firm that specialises in cover for those in the construction trade. As a non-profit organisation, it has been specialising in providing protection for builders, scaffolders, chartered surveyors and the like for over 60 years. With this in mind, how does the underwriting differ for, say, a scaffolder as opposed to an unskilled labourer? Scaffolders, it can be assumed, must have severely weighted premiums because of their more dangerous occupation?
Apparently, not so: “We only specialise in the construction industry and the manual trades in that mix. I don’t think that the scaffolders are the problem, to be honest, because they are highly skilled workers. The real problem is the labourer who pushes the wheelbarrow on the first floor of the scaffolding, pushes it off, forgets to let go of the handles and goes down with it. It’s always more of a problem with unskilled workers rather than skilled ones.
“However, enormous steps have been taken in the industry to improve health and safety.
There’s still a lot more that needs to be done but I think it’s probably fair to say that all concerned would regard just a single fatality as one too many. As far as we are concerned, there’s no point in excluding scaffolders or labourers because they are the people we are there to provide cover for.”
Jory says that there are lots of good employers in this marketplace, contrary to what may be perceived popular opinion. Unfortunately, he says, quite often those good employers are tarred with the brush of being of the bad kind: “There are a lot of employers out there that do care about their people and want to provide them with the best range of benefits that they can. For them, it is about perceived value for money as part of their remuneration for employees.
“It’s not just wages for people, although they are the most important part of it, but there are other things like pensions and hospital savings plans, especially with the negativity that surrounds the NHS at the moment. And these policies are very good value for money. They can easily get back, within one year, the one trip to the dentist and what they get from the plan will probably be more than what their premiums are for the first year. Obviously, you would rely on the significant number of people that do not go to the dentist.”
However, the UK and the rest of the world is still in a recession so what does he forecast as being likely to happen in the near future?
“It’s not our area,” he says, “but now wouldn’t be the right time to launch a mortgage protection product in a recession – unless you wanted lots of claims. We don’t anticipate a significant increase in accidents or deaths although I was reading in the paper this morning – this was to do with the Armed Services – about a significant increase in the number of suicides. Suicide is an issue and I guess it could become more of an issue in the current economic situation. I’m not talking about thousands and thousands of people but we could see an increase as the result of the recession. I guess one could argue that if there are more people unemployed then they are less likely to have an accident but, on the other hand, we find with our accident product that half of the claims are not work related but are sports related.”
Perceived value
Now, he feels it might be the perfect time for employers to be made aware of the value of cash plans, citing an industry specific concession and the ‘perceived value’ that employees give to the product: “Employers are always looking to provide the best value for money. There are attractions such as holiday pay. There is currently a concession for construction industries which lasts for another three and a half years, where any holiday pay that passes through a centralised scheme is free of national insurance, both for employers and employees. Unfortunately, that concession only lasts for another three and a half years, and it only applies to the construction industry.”
However, he adds: “The value of that concession goes a long way towards paying for other benefits so I think the challenge, before that concession is withdrawn, is to ensure that employers take full advantage of it while it exists because it does pay for the accident, life and, if they are provided, pensions. Employers are always looking for new cost efficient benefits and L&G has been talking about the subject. It has said that the key to this is finding things that employees value far more than the cost. There is a feeling that employees may value the hospital savings plan far greater than the costs to the employer. So, my personal view is that there has to be the continuation of provision of good, appropriate, economically viable products – that does not mean there has to be no cost – which the employers perceive to be worth more than the expense.”
Jory contends that employee benefits do not sacrifice quantity for quality, in that high-quality benefits are not tailored to a minority of employees while the majority are left to go without: “I think that in the construction industry, for example, employers value the skilled bricklayer at one end of the scale as much as they would do the skilled quantity surveyor at the other end of it. The two positions won’t get the same salary or benefits but I think employers still regard it as equally important to provide an appropriate range of benefits. There are benefits out there on the market – there are still plenty more that we can go after where the cost to the employer is a lot less than the perceived benefit to the individual. And I think that’s what employers will be looking for. There are pressures on salaries in the economic environment but if employers can find other means of keeping and, where necessary, attracting good staff, then I think the range of benefits has a vital role to play there.”
