Q

Employees often fail to appreciate the true cost of their employment

Discuss Employees fail often to take into consideration of other benefits

Question. "Employees often fail to appreciate the true cost of their employment". Discuss. 

In general, employees believe that the only thing they were paid by the employer to them are the take-home payments. They fail often to take into consideration of other benefits which were paid to them or paid for them and ended up evaluating the total benefits as the take-home salary. This is because they are found to be largely unaware for he non-cash value of the benefits they were given, and they were served.

Employees are paid the followings:

a)      Wage or salary in cash

b)      Wages and salary in kind

c)      Free health and life insurances

d)     Benefits of transportfree of cost

e)      Free lunch

f)       Free clothes

g)      Bonuses paid annually

h)      Benefits of retirement

i)        Tax benefits

j)        Insurance extended to family members of the employees

k)      Free education benefits extended to family members ad children of the employees.

l)        Interest-free of concessional loans provided to employees.

m)    Home loans or hosing benefits

In general, the employee only counts what's being paid in cash and does not consider the benefits paid in kinds such as the healthcare insurance and insurance for accidents etc. which can cause immense damage to one's ability to earn if the employee is met with a serious accident at the workplace. Similarly, taxes on fringe benefits are paid by the employer on behalf of the employee and the same is often ignored but the employees. Free housing facility provided to employee generally tends to be 15%-20% of the entire cash salary. This is also not evaluated properly by the employees. However, the employer has to spend a considerable amount of money on them as well. Loans at concessional rates mean the employer undergoing opportunity costs and paying taxes for them also sizable. Many other benefits like a car benefit is also not considered monetarily by the employee and as a result of which the employee is not aware of the real cost that the employer is spending for their benefit and thus undermines the efforts made by the employer to increase their standard of living(Carl S. Warren and James M. Reeve, 2012, 12th edition).

Maintenance of the workplace which is safer and convenient etc. for the employees is often ignored by employees while estimating the true cost of employment because they regard the same as a statutory requirement and duty of the employer, but a good workplace is maintained for health benefits for the employees and only benefits them in the long run. Thus, the failure to recognize and understand the benefits is the main reason why employees often fail to appreciate the true cost of employment. As the value of the additional non-cash benefits are pretty significant and sizable they must be included in the true cost analysis for the individual employee to see the real costs being incurred by the employer and unless the real cost is estimated and seen with the perspective the same won't be understood.  

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