The benefits employees need aren’t always the benefits employers fund

By Zandile Monnakgotla, Senior Sales Executive at Essential Employee Benefits

Employee benefits are intended to help employees, but many benefit plans were created decades ago for a workforce that was substantially different from today’s. The majority of workers in those days were permanent, had comparable pay, and worked for the same company for many years. The fact of the matter is that many organisations’ benefits strategies have not kept up with the changes in the world. To explain further, traditional benefit models largely developed around permanent employees, relatively consistent income levels and the expectation that people would spend many years with the same organisation. Today’s workforce is more diverse, with permanent, contract and hourly employees experiencing very different financial pressures and having very different needs.

At the same time, the cost of living has changed the way employees evaluate what they receive from their employer. A benefit can be valuable in theory but have little practical value if an employee cannot afford to use it.

This is particularly relevant when looking at medical aid. Statistics South Africa puts medical aid coverage at just 14.1% of the population, falling to 7.8% among people aged 20 to 24. That means a benefits strategy centred heavily on medical scheme contributions may be allocating significant employer spend towards a benefit that a large proportion of employees either cannot afford or choose not to take up.

The issue, therefore, is not necessarily that employers are offering the wrong benefits. It is that the benefits may not be reaching the people they are intended to support.

A low turnover rate does not tell the whole story

That distinction becomes more important when employee retention is considered.

National turnover has fallen to around 13.5%, the lowest level since 2021. It would be easy to interpret this as evidence that employees are staying with their employers for longer. However, resignations still account for 39% of turnover, while unemployment remains at 33.6%. Employees remaining in an organisation because alternative employment is limited should not be confused with employees who are engaged, satisfied and likely to stay.

For employers, this makes the quality and relevance of the employee experience more important than a simple turnover figure.

Benefits form part of that experience, but employees do not assess them in the same way that an organisation does. They are unlikely to judge a benefits package by the total rand value of the employer’s contribution. Instead, they are more likely to consider whether they can access the benefit, whether they can afford the costs associated with using it and whether it addresses a need they have now.

The difference between what benefits cost and what they are worth

This is where cost and perceived value become two different measures.

An organisation can increase its benefits expenditure without increasing the value employees receive from that expenditure. Understanding the difference requires employers to look beyond what they provide and examine what employees actually use.

Utilisation is particularly useful here. Rather than relying solely on employee satisfaction surveys, employers can assess how many eligible employees used each benefit over the previous 12 months. Satisfaction provides an indication of sentiment; utilisation shows whether the benefit is forming part of employees’ lives.

Once utilisation is considered, affordability, accessibility and flexibility become central to benefit design.

A benefit only has value if employees can use it

Affordability is not simply the employer contribution. An employee may still have to cover a shortfall, co-payment, transport costs or time away from work to access a service. When household budgets are under pressure, these additional costs can determine whether a benefit is used at all.

Accessibility has a similar effect. A benefit can offer extensive cover but still be difficult to use if employees have to travel long distances, navigate complicated processes or access services only during working hours. Benefits that are available through convenient networks, extended operating hours and straightforward channels are more likely to be used.

Flexibility then allows employers to account for the different circumstances within their workforce. Someone earning R12,000 a month does not face the same financial pressures as someone earning R80,000. Treating both employees identically does not necessarily create an equitable benefits structure. A more flexible approach can direct existing spend towards support that is meaningful at different income levels.

The role of a benefits provider is changing

This is also where an experienced benefits provider can add value. The role should extend beyond supplying access to individual products. A provider can help an employer understand its workforce, assess existing benefits, identify gaps in reach and utilisation, and structure options around different employee needs.

It can also simplify communication, because even a well-designed benefits package has limited value if employees do not understand what is available to them or how to access it.

This can change the conversation from adding benefits to managing them properly.

There is a tendency to add new benefits when employees appear dissatisfied, but every additional offering can increase complexity. If employees cannot easily understand what they have, or which benefit is relevant to a particular problem, the organisation may be paying for support that is not being used.

Better benefits do not necessarily require a bigger budget

The more sustainable approach is to establish what is already working before committing additional budget. Employers can measure enrolment and utilisation, segment their workforce according to income and employment type, and consider whether existing spend could be redirected towards benefits with broader practical reach.

The entry-level offering deserves particular attention. Employees who sit outside traditional medical aid structures should not have to wait until their financial circumstances improve before receiving meaningful support. The benefit structure available to them should provide something they can use from the beginning of their employment.

This matters not only for employee wellbeing but also for business performance. Health-related productivity losses in South Africa have been estimated at around R161 billion a year through absenteeism, presenteeism and untreated mental health. Financial pressure creates another productivity cost: Wealthbit’s 2026 research found that 80% of South African employees worry about money most of the time, while financially distressed employees lose the equivalent of roughly 20 working days a year managing personal finances during work hours.

These pressures exist regardless of whether an employer’s benefits package looks competitive on paper.

Closing the gap between benefits and the workforce

The challenge for HR is therefore to understand where its benefits investment is actually making a difference. That requires looking at the whole workforce rather than designing primarily for employees who can already afford comprehensive cover.

Medical schemes and health insurance also need to be considered accurately within this process. They are different instruments governed by different legislation, and health insurance should not be presented as a replacement for medical aid. It can, however, provide structured and affordable access for employees who currently have no cover.

Ultimately, the measure of a benefits strategy should be more practical than the number of benefits an organisation offers. It should be whether employees across different levels of the workforce can understand, afford and use the support available to them.

For employers, that means the next step is not necessarily to spend more. It is to understand the workforce better, measure utilisation, address gaps in access and use existing investment more effectively. With the right benefits expertise supporting that process, organisations can build packages that are more relevant to the realities employees face today, and more sustainable for the business that provides them.