Welfare and Health Policies and Wal-Marts Benefits Strategy - Essay Example

342069 - Welfare & Health Policies: Welfare and Health Policies: An International and Comparative Perspective Reviewing Wal-Mart’s Benefits Strategy: Learning from abroad I suggest a stepwise procedure for the next assignment (#2 First step: Read the memo by written by Susan Chambers, “Reviewing and Revising Wal-Mart’s Benefits Strategy” (memo is attached below and I will also upload it as soon as the writer is selected). Then focus on Section 2, which discusses in detail the nine limited-risk initiatives and five bold steps the Board of Directors is recommending. Thereafter, concentrate on the first two of the bold steps. They constitute the topic of assignment #2 As a result of this reading; you should be able to find out what the similarities and the basic differences are between health benefits and retirement benefits the way they are provided in the US (especially with respect to the universality of coverage). Second step The topic of assignment #2 relates to the second of the “bold steps” that Wal-Mart’s Board of Directors suggests it be taken to improve the company’s benefit strategy: “Restructure the retirement program (i.e. the profit sharing and 401(k) program to reduce costs and help associates save for retirement” (P.13) Now imagine the following situation: You have been hired by Susan Chambers (who wrote the Memo to Wal-Mart’s Board of Directors) to comment on this strategic recommendation, not from the company’s micro-perspective, but from a macro social-policy perspective and in a learning-from-abroad context. Here is how you should proceed, if you were to accept this assignment: • Describe the US retirement benefits system in terms of a multi-pillar theoretical framework. • What are the strengths and weaknesses of the US system compared to multi-pillar or single pillar systems used in other highly developed countries. • Explain to Susan why you think the issue of retirement benefits ranks higher in terms of associate satisfaction than health benefits. • Finally tell Susan about your experience with retirement benefit plans in comparable countries abroad, such as Canada or European countries. To prepare the last of these talking points, Great Britain and Switzerland are two obvious candidates, because of your reading assignments and because the author of textbook we use (Economics of the Welfare State, Nicholas Barr) is British. It may also be helpful to visit the official website of the US Social Security Administration at www.socialsecurity.gov (Social Security Online > Office of Policy > Data > Social Security Programs Throughout the World > Country Summaries). You must use this website anyhow for the first talking point. With respect to pension benefits in the US, you may also want to visit the U.S. Department of Labor (Employee Benefits Security Administration) at www.dol.gov/ebsa. Good luck! Wal-Mart as with many other leading companies based in the United States has got serious areas of concern when it comes welfare and health issues relating its own employees. Wal-Mart as a company believes that it is been hampered by the extra healthcare and retirement costs of its employees, a position that was highlighted in the memo. It is a good idea for Wal-Mart to consider ways it can reduce, fund, or achieve greater cost effectiveness when it comes to providing healthcare and pension payments to it’s employees. Wal-Mart has a long tradition of caring for its employees, yet Wal-Mart does not want to risk its own future. If the bleakest forecasts about the cost of providing healthcare cover, health insurance, and occupational pension schemes for its United States based employees could prove highly prohibitive for the Wal-Mart group. Healthcare costs are increasing due to the United States population ageing, combined with cost of medical treatments, drugs, and surgery generally rising faster than the rate of inflation. Schemes for retirement pensions whether publicly or privately funded are also coming under increasing pressure as the ageing population means that people draw their pensions for longer, whilst there are fewer paying contributions into the pension funds. As already noted the private sector companies in the United States such as Wal-Mart have a responsibility to provide for the healthcare cover, health insurance, and pension funds for its employees due to the limited free healthcare and pension funds offered by the United States federal government. Due to the state of the federal government’s budget deficit an expansion of the Medicare programs or the size of state pensions is highly unlikely, even if the traditional reluctance of United States policymakers to expand healthcare and social security measures could be reversed. Other countries have previously proved more generous in providing healthcare and social security, although they have similar restrictions on funding such programs as the United States does. However, the main purpose of this report is to examine and evaluate the differences in healthcare cover, social security, and retirement pension funding or provision in the United States with other countries such as Britain, Switzerland, Germany, and closer to home, Canada. The United States was slower than other countries when it came to developing healthcare, retirement pensions, and social security provisions. That slowness could be attributed to a different social and economic ethos prevailing in the United States compared to other countries, as well as many Americans finding it easier to provide for themselves. Other countries such as Britain and Switzerland have offered forms of social security for centuries, although these measures could not have been considered either universal in application, or generous in their scope. The English Poor Laws provided for extremely limited poor relief payments without any kind of healthcare provision, or the setting aside of any funds for old age. The Poor Laws were amended in 1834 to deter as many people as possible from seeking poor relief. Families had to be very desperate to accept the harsh conditions linked with the workhouses, and their draconian regimes that made people work hard and split up whole families as a matter of cause. The Poor Laws were a system that was paid for and administered at a local level, often with local ratepayers unwilling to pay too much to look after the lazy or the work shy. These early forms of social security proved wholly inadequate for relieving let alone reversing poverty. In such circumstances, unemployment, underemployment, physical inability, or simply old age made all the difference between living meaningful lives or being barely able to survive. Such conditions forced people to seek the limited poor relief available, or face destitution. Some people tried to make allowance for no longer being able to work by having savings, or by paying into insurance and pension schemes.1 The first country to introduce an almost universal system of healthcare, social security, retirement pension provision was Imperial Germany during the 1880s. The German system relied on people paying contributions into the system via their employers or by themselves if they were self-employed when they were working. The contributions funded the covering of healthcare provision, unemployment benefits, and retirement pensions. Bismarck’s main motives for introducing these welfare measures was to promote social and economic stability rather than alleviate poverty, yet the system proved to be highly adaptable and endurable. Indeed the healthcare and social security systems of present day Germany are run along similar lines as they were during the 1880s, only the level of coverage has increased. The level of such provision is probably unsustainable in the long-term due to the ageing of the German population.2 In Britain the welfare state began to emerge as the eventual replacement of the Poor Law system during the period immediately before the First World War. The Liberal government introduced limited unemployment benefits, with old age pensions, and job centers to help people find jobs, paid for by national insurance contributions and income taxes. Even this limited scheme offered greater social security provision than the Poor Laws had ever done. All benefits were administered on a contribution basis, and those benefits would run out once the contributions had been exhausted.3 There was no formal retirement age, and the majority of people could not cope financially without being able to work, and perhaps history is now turning full circle as people are having to work longer due to the declining value of retirement pensions. The availability of free healthcare in Britain before 1945 was sparse, which meant that many people went without medical treatment.4 The situation in Britain did not alter until the Atlee governments of 1945 to 1951. Atlee and the Labour party were determined to eliminate poverty, ill health, and social deprivation as much as they could. Social and economic policies were driven by the Labour party’s own constitution, its long-term objectives, and acting upon the recommendations of the Beveridge Report. Universal benefits were available to more people for longer periods (in theory for as long as those benefits were needed), whilst those on low incomes or incapable of work were able to claim supplementary benefits. Family Allowance was introduced, which was available for everybody hat had children at the same rate of benefit for every individual child, irrespective of family income. However the crowning achievement of the Atlee governments was undoubtedly the establishing of the National Health Service (NHS). The founding principle of the NHS was that healthcare provision was free to all at the point of delivery to everybody that needed medical treatment. The NHS remains very popular with the British public yet its adequate funding has always been an area of contention for its management and successive British governments.5 Over the years the NHS has succeeded in raising life expectancy levels, as well as reducing the death and birth rates. The combination of these factors has had social and economic implications that were not anticipated in the immediate post-war period.6 The trend of people living longer, and hoping to be retired longer has social and economic consequences for the majority of Western societies that impacts on companies operating in the private sector, as well as national governments, and taxpayers.7 From the end of the Second World War through to the beginning of the 1970s, Western Europe, the United States, and Japan experienced what contemporaries, economists, and historians described as a ‘Golden Age’. The period witnessed high employment, high economic growth, and an unrivalled expansion of healthcare and social security provision. In the United States the Kennedy and Johnson administrations extended the social security system and the range of the Medicare programs. The Scandinavian countries, Switzerland, and France all developed systems as universal in coverage as those of Britain and Germany.8 Unfortunately the Golden Age was not as golden as it might have appeared, economic growth and stability began to decline in the1970s leading to a move away from Keynesian supply side economic policies. Governments also began to realise those annual budgetary increases would never keep pace with the demand for healthcare, social security, and retirement pension provision.9 In Britain the NHS had been subject to budgetary constraints almost from its inception, indeed people had begun to prescription charges within a few years of its foundation. NHS managers have made decisions about the rationing of services for decades although there was no talk publicly of them doing so. The Thatcher government wanted to improve the efficiency of the NHS by introducing an internal market to reduce costs. Some services linked to the NHS were either privatised or contracted out to private sector companies. Despite these efforts the Thatcher government continued to have to find ever increasing funding for the NHS for diminishing levels of treatments and effectiveness.10 Western European governments including those of Britain and Switzerland have tried to reduce the demand on their public healthcare services in various ways such as trying to improve general levels of public health, or even restricting the medical treatments available. In Britain successive governments have tried to improve public health by campaigning for people to stop smoking, reduce heart disease, alcohol consumption, and reduce the intake of salt and sugar. Diabetes, heart diseases, and cancers are a major strain on all healthcare systems that could be reduced by people looking after their own health better. Preventative medicine is always more cost effective to provide than curative medicine.11 The issue of retirement pensions seems to be a highly contentious issue in recent years. Governments throughout Western Europe, the United States, and Canada have realised that state retirement pensions are increasingly inadequate for people to live on after their retirement.12 Although there is debate as to whether the way in which system of pension schemes generates the most cost effective and highest yielding state retirement pensions. In some respects the problem with state retirement pension schemes is that the demographic structures of the populations in Western Europe and North America is changing in such a way as to make the present schemes unworkable without reform or restructuring.13 Perhaps the present state retirement pension schemes in the United States are more cost effective than those used in Western Europe and Canada, although they have the disadvantage of not paying people as much once they have retired. Governments in all these countries have attempted to persuade people to increase the level and amount of private or occupational pensions they have to make up for the reducing value of their state pensions. Other solutions include allowing people to increase their pension contributions on a voluntary basis, allowing people to work beyond the official retirement age, and increasing the official retirement age.14 Bibliography Barr Coxall B, Robins L & Leach R (2003) Contemporary British Politics 4th edition, Palgrave, Basingstoke Eatwell R & Wright A, (2003) Contemporary Political Ideologies 2nd Edition, Continuum, London and New York Fisher J, Denver D, & Benyon J, (2003) Central Debates in British Politics, Longman, London and New York Hobsbawm, E (1994) Age of Extremes, the Short Twentieth Century 1914-1991, Michael Joseph, London Moran M, (2005) Politic and Governance in the UK, Palgrave, Basingstoke www.dol.gov/ebsa www.socialsecurity.gov Read More