Apac employers rethink employee benefits spend to draw talent, manage costs: survey
They aim to rebalance or reallocate benefits spending as they face conflicting priorities
[SINGAPORE] Asia-Pacific (Apac) firms are rethinking their employee benefit strategies amid rising costs and stiff competition for talent, according to a survey by Nasdaq-listed global advisory firm WTW.
This comes as employers in the region face diverging priorities, said the 2025 Benefits Trends Survey, which gathered insights from nearly 2,000 employers across 20 Apac markets from March to April.
On the one hand, employers need to attract talent amid persistent labour shortages and structural gaps in the market, particularly in specialised skills. On the flipside, they face cost pressures that affect their ability to offer employees benefits – which are viewed as tools to attract and retain talent.
“Rising budgetary pressures and benefit costs, particularly around healthcare, are impacting employers’ ability to enhance and deliver on their benefits more than ever before,” the survey noted.
To reconcile these competing demands, employers are seeking to reap more value from their current investments while managing cost constraints, by rebalancing and reallocating their benefits spending.
Conflicting demands: maximising value, reining in costs
With rising cost pressures, most firms do not plan to expand their benefits spending or the range of benefits offered in the next three years – as only 20 per cent of respondents said they intended to do so.
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Yet, the vast majority of firms are not looking to cut back on benefits spending either.
Even as managing company costs ranked as employers’ top benefits priority in 2025, only 2 per cent of respondents plan to reduce benefits spending over the next three years.
Rather, the majority of employers are aiming to optimise their existing benefits and to extract greater value from their current benefits spending while they navigate cost constraints.
To reconcile the conflicting ambitions, of maximising value while reining in costs, 61 per cent of employers are looking to reallocate or rebalance their benefits spending.
This entails carefully considering which benefits employees want and need, as well as assessing which deliver the most value, the survey said.
Such a recalibration, which involves adding or enhancing some benefits while reducing or removing others, can be challenging – especially as changes that involve scaling back existing benefits may trigger strong reactions among employees who lose out, it said.
Employers should thus carefully consider their communication strategies, which are crucial to managing employee reactions to changes, WTW said.
Employers face talent competition, target key “pressure points”
Talent challenges are set to remain a key influence for benefit strategies, as competition for talent ranked as the top concern faced by Apac employers, said WTW.
Rising benefits costs and expectations for enhanced experiences also ranked high among the concerns employers faced.
Across the region, employers face labour shortages in key skill segments, alongside demographic shifts such as ageing populations and shrinking talent pools, the survey said.
“With talent issues persisting, employers plan to use benefits as a tool to signal their organisational purpose and values as they work to attract and retain talent,” it said.
Notably, employers are looking to make benefits more employee-centric, by designing them with a sharper focus on attraction, retention and employee well-being.
“Employers should articulate a clear value proposition through benefits, and support their employees’ specific needs (while also) reflecting the organisation’s broader values and how they connect emotionally with employees,” WTW said.
The survey noted that employers are adopting a more disciplined approach to rebalancing their benefit spend where it matters the most as they work to use benefits to strengthen their employee value proposition.
They are investing in employee needs with greater precision and targeting key employee pressure points, from mental health and family benefits to emotional and financial well-being, the survey found.
Spotlight on healthcare
Health benefits ranked among the top priority areas for benefits, as employers in Apac are projected to face one of the highest medical inflation rates across the globe.
To cope with high costs, 51 per cent of employers are looking to enhance the value they get from vendors of healthcare benefits, said WTW.
Another 38 per cent plan to adopt targeted programmes to better manage the high-cost conditions, the survey said. Among these, four in five plan to increase the use of targeted programmes to address high-cost conditions such as mental health, women’s health, cardiovascular disease and cancer.
Notably, the majority of employers view mental health as a top area they wish to focus more on over the next three years, according to the survey.
This comes as around one third of employees display signs of anxiety and depression, the survey said, citing data from WTW’s 2024 Global Benefits Attitudes Survey.
Additionally, more employers are looking to offer comprehensive leave for caregivers, as well as considering putting in place medical benefits that support women’s health, WTW noted.
Around one quarter of employers plan to or are considering putting in place a menopause policy, up from only 4 per cent who are currently already do so.
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