Public Policy toward Employee Benefits in the United States, Canada and Taiwan:Lessons for European Integration

Abstract

Abstract. Most governments intervene in the labor market to promote the provision of certain merit goods such as retirement income and health insurance. As economic integration has progressed within the European Community, questions have arisen concerning the harmonization of such benefits. Using case studies from three non‐EC countries—the US., Canada, and Taiwan—the authors show that benefit structures and decisions reflect institutions which are difficult to change and whose patterns do not seem to reflect a simple economic determinism.The U.S. and Canada, two similar countries with integrated product markets, have adopted very different health insurance policies, but similar pension policies. Taiwan, despite its different stage of development, has a Canadian‐style health insurance system and is currently grappling with how to arrange its pensions. A key outcome of the benefit‐decision process is whether entitlements are external to the firm or contingent on maintaining a specific job attachment.An important factor in modifying benefit arrangements is the degree of social concertation present in national political systems. Benefits systems are best designed or reformed when institutions permit discussion of macro pressures. EC countries, now considering harmonization of economic institutions, have the opportunity to modernize their benefit arrangements.A related paper was presented to the Ninth World Congress of the International Industrial Relations Associations and its associated Study Group on Economic Policy and Social Concertation, Sydney, Australia, August 30‐September 4, 1992.