Jozef Pacolet Vronique Coudron An Marchal Benchmarking: some macro en mesoreflections

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Benchmarking labour conditions in the banking
and insurance industry Jozef Pacolet / Véroniqe
Coudron / An Marchal Hoger Instituut voor de
Arbeid, Katholieke Universiteit
Leuvenwww.hiva.be
Contribution to the UNI-Europa Finance
SeminarImplementing benchmarking on pay,
working timeand employee benefitsin the finance
sector Luxembourg, 25 - 26 November 2002

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Part I. Some comments on the methodology op
benchmarking
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Why benchmarking?

• Information and understanding
• Inspiration
• Arguments for policymaking
• Convergence or social competition
• Convergence or harmonization
• Co-ordination by markets or hierarchies or
  benchmarking

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Levels

• Individual qualification, function, age
• Firm
• Country
• Cross member states
• Industry

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Steps

• Benchmarking is often seen as simply number
  crunching
• Fact and figures findings data mining and
  comprehensive synoptic overviews
• Targets and indicators
• Definitions and normalization of definitions
  meta-data, glossary, translation
• Combining quantitative and qualitative
  information
• Relevant aspects at micro (individual/firm), meso
  (firm, industry) and macro level

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Success factors for benchmarking and
best-practice transfer efforts

• Transfer is a people- to- people- process
• Learning and transfer is an interactive ongoing,
  and dynamic process that cannot rest on a static
  body of knowlegde
• Benchmarking stems form a personal and
  organizational willingness to learn
• There are benchmarks for benchmarking

Source American Productivity Quality Center,
Benchmarking and Best Practice website 2002
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Definition

• AFQC defines benchmarking as being humble enough
  to admit that another company (collective
  agreement, member state of EU, working condition)
  is better at something and being wise enough to
  learn how to match or surpass it

Source American Productivity Quality Center,
Benchmarking and Best Practice website 2002
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Growth to maturity of benchmarking

• 5 steps not utilizing/becoming aware/building
  support structures/getting results/maximizing
  benchmark impact
• 5 levels 1 to 5
• from one state to another usually defined as two
  years from now
• Success factors management culture/focal
  point/tools

Source American Productivity Quality
Center, A New Approach to Assessing
Benchmarking Progress, May 2001
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Own experience in comparative EU research

• Definitions/harmonization/ translations/common
  language
• Facts and figure finding
• Capitalize on previous information/check/complete
• Need to confront national reporting and view with
  external reading (form coordinator, peer
  reviewer, second opinion)
• Capitalize as much as possible on existing data
  sources
• Most important benefit form international
  comparison is understanding and feeding national
  debate

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Benchmarking is a road to progress an example of
OECD

• The roadmap for benchmarking business policies
• Benchmarking process launched by Directorate for
  Science, Technology and Industry
• To follow up the OECD Growth Project
• Four different phases
• Plan and define phase
• Collect and evaluate phase
• Analyze and identify phase
• Report and adapt phase
• Role of peer reviewing versus central monitoring
• Peer reviewing or peer pressure

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Open method of co-ordination how to achieve
common EU objectives?
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European Governance. A white paper

• The open method of co-ordination is a way of
  encouraging co-operation, the exchange of best
  practice and agreeing common targets and
  guidelines for Member States, sometimes backed up
  by national action plans as in the case of
  emplkoyment and social exclusion. It relies on
  regular monitoring of progress to meet those
  targets, allowing Member States to compare theire
  efforts and learn from the experience of others (
  White paper, 25/7/2001, p. 21)

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Europe

• 15 different welfare states
• Wave of enlargement
• ? No single model
• Convergence instead of harmonisation
• - Convergence in objectives (not institutional)

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Method of open co-ordination

• - Used in
• - Employment Guidelines
• - European guidelines for social protection
  (social inclusion, pensions)
• - MOC
• - Setting common objectives at European level
• - Designing appropriate national policies to
  achieve the objectives
• - Reporting policy developments and outcomes

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Method of open co-ordination
- Lisbon summit MOC established as a new modus
of European governance broadly applicable to all
kinds of issues in European policymaking -
Objective not a common policy but
sharing policy experience and the
diffusion of best practises
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Characteristics of the MOC
- The practise of cross-national policy
learning - Based on setting specific targets -
Benchmarking - Periodic monitoring -
Evaluation - Peer review
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Advantages of MOC
- Contextualised Benchmarking - Reconciling
diversity and democratic accountability of
national states - incite to policy learning
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Weakness of OMC
- Soft policy co-ordination (lack of sanctions
or rewards) - Underlining the OMC to the
detriment of more traditional forms of
legislation /OMC should be a complement rather
than replacement for Comm. action - Risk to
depreciate social partners and social dialogue -
Risk to vague objectives - For ex. social
protection and inclusion lack of statistics on
performance and indicators for social policy
progress - How much diversity the OMC can
tolerate?
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Part II. First attempt to complete the internal
benchmark panel with external data
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Topics and dimensions again

• Employment
• Working hours
• Wages
• Employee benefits
• Social protection
• Training
• Gender aspects

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Dimensions
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Concerns

• validity of data collection procedure
• effectiveness do not collect data, collected
  elsewhere
• Comparability in definitions
• Relevance major aspects
• Robustness contest own information with other
  information of industry

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Role of Network and of HIVA

• Network
• network of unions and negotiators
• institutional information on collective
  agreements
• panel of human resources in the sector
• mutual exchange and peer review
• information of micro/meso level, international
• HIVA
• scientific support for the analysis panel data
  and surveillance of external comparability
• completion and confrontation of own information
  network with micro/meso and macro data on labour
  market conditions, labour cost, social protection
  and financial industry

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Some information on some dimensions

• Sources
• Income or Labour Costs Survey of Eurostat
• Labour Force Survey of Eurostat
• Labour market information of OECD
• Industry information of Eurostat
• Industry information of OECD
• Missoc information on social protection

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Income and labour costs

• Components
• Structure in 1996 comparison between member
  states
• Evolution 1988 - 1999
• Comparison between banking and insurance
• Comparison between finance and rest market sector
• LIS and micro-simulation of income and taxes

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Eurostat Statistics on labour costs

• 1) Monthly and hourly labour costs
• at 2-digit level of NACE nomenclature
• 65 Financial intermediaton, except insurance and
  pension
• 66 Insurance pension funding
• 2) Structure of labour costs
• at 1-digit level of NACE nomenclature
• J Financial intermediation

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• Structure of labour costs
• D 1 Compensation of employees
• D 11 Wages and salaries
• direct remuneration and bonuses
• direct remuneration
• bonuses
• payments to employees saving schemes
• payments for days not worked
• wages and salaries in kind

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• Structure of labour costs (continued)
• D 12 Employers social contributions
• D 121 Employers actual social contributions
• statutory social security contributions
• retirement pension, sickness, maternity,
  disability
• unemployment
• occupational accidents and diseases
• family allowances
• other

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• Structure of labour costs (continued)
• Collectively agreed, contractual and voluntary
  social security contributions
• Supplementary pension schemes
• Suppl. sickness insurance schemes
• Suppl. unemployement insurance schemes
• Other supplementary schemes
• D 122 Employers imputed social contributions
• Guaranteed remuneration, event of sickness
• Guaranteed remuneration, short-time working
• Payments to employees leaving enterprise
• Employers inputed social benefits

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• Structure of labour costs (continued)
• D 2 Vocational training costs
• D 3 Other expenditures
• D 4 Taxes
• D 5 Subsidies

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Employment and employment conditions

• Labour force Survey Eurostat
• Nace-3 digit level
• salaried and independent employment,
• gender, age,working time, educational level

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part-time employment in the finance sector, 2000
Source European Social Statistics - Labour
force - survey results 2000 (Eurostat)
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Average weekly hours of work in the finance
sector, full-time employment, 2001
hours/week
Source European Social Statistics - Labour
force - survey results 2001 (Eurostat)
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Average weekly hours of work in the finance
sector, part-time employment, 2001
hours/week
Source European Social Statistics - Labour
force - survey results 2001 (Eurostat)
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Social protection and occupational welfare

• Institutional information in MISSOC
• Macro-information on financingsocial protection
• Occupational welfare

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MISSOC mutual information system on the social
protection in the EU member states and the EEA

• Check/update for your country in MISSOC the
  institutional details on pensions insurance
  (http//europa.eu.int/comm/employment_social/misso
  c/index_en.html)

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Financial industry data at micro, meso and
macro-level

• Banking and insurance industry
• Eurostat industry statistics
• OECD Financial sector statistics profitability
  of financial instituions
• ECB
• Industry, firm or group information on output,
  growth, productivity, profitability, return on
  equity,service

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Number of local units per 1000 000 (2000)
Source Eurostat, Statistics on credit
institutions, 2002
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Relation between change in employment and
change in number of branches for some EU member
states 97-00
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Relation between change in employment and change
in profit for some EU member states 1997 -2000
(in )
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Quality of working conditions

• Other labour conditions
• Gender issues
• Training
• etc.