How employee benefits are changing in Latin America

At Howden, we closely monitor how global events and economic shifts influence the way companies support their people. This month we caught up with our teams at Howden Brazil and Howden Mexico for an update on the Latin American market. They summarised their key priorities as being health, wealth, and above all, flexibility.

While the war in Ukraine has had a limited direct impact on Latin American benefits strategies, the ripple effects of the Covid-19 pandemic is still having an impact across the region. 

In Mexico, the pandemic was the single most expensive insurance event in the country’s history. Following major pressure on public and private healthcare providers, medical expenses increased significantly, as did demand for certain types of medical insurance. For example, there’s been a notable rise in employee demand for life insurance across all demographics – not just white-collar industries – with multinational and larger Mexican employers paving the way in this area.

With costs still high and with a lack of regulation in medical and hospital fees, employers are taking preventative measures to mitigate a rise in premiums. More companies are offering gym memberships, fitness classes and nutritional advice to improve employee health. Others are offering coverage for early-stage illnesses, and encouraging employees to seek earlier treatment for minor medical issues. This is in contrast to coverage for major medical treatments only, which used to be the norm. More comprehensive coverage is a huge plus for employees, who are increasingly attracted to positions with extended medical benefits. 

In Brazil, where healthcare coverage is usually tied to employment, private health insurance is a standard benefit that’s becoming more expensive for companies to provide. Between 2023 and 2024, the number of people covered by private health plans increased by 2.7% and corporate health plan costs rose by 5.05% - meaning more employees to cover at a greater expense. 

Meanwhile, mental wellbeing is higher up on HR’s agenda. Attitudes towards mental health have changed since the pandemic, and more employees than ever are asking for support. “Mental health issues are no longer stigmatised,” explains Claudia Machado, Vice President (Benefits) at Howden Brazil. “The pandemic opened up a world of possibilities for treating the mind and body – and now employees ask for help more than ever.”

It's a similar situation in Mexico, where there has been a significant shift in public understanding of mental health challenges over the past three years. Historically the stigma around such conditions meant support was excluded. But now wellbeing-related benefits such as Employee Assistance Programmes (EAPs), virtual therapy and anti-anxiety services are integral to a competitive benefits package. The most comprehensive EAPs now emphasise mental health care, counselling provision and crisis support over legal and notary services.

Popularity of wealth-focused benefits

Higher inflation, higher interest rates and a higher cost of living have been global themes in recent years, with employees’ financial health a frequent topic of discussion.

In Brazil, existing wealth-focused benefits are gaining popularity. Financial literacy education workshops are helping employees to manage their money, reduce debt and plan for the future, while interest-subsidised emergency loans are available in more serious circumstances. As part of a strategy to drive long-term financial security, companies are incentivising employees to increase their pension plan contributions.

With health and financial wellbeing coming to the fore, lower priority benefits are taking a back seat. Many Latin American companies are emphasising efficiency over novelty and focusing on options that have clear practical benefits. In Brazil’s tech industry, for example, previously popular perks such as gaming rooms and complementary food are in lower demand.  Elsewhere, company cars and fuel subsidies are becoming less common due to rising levels of remote work and evolving employee expectations. Meanwhile, transportation allowances remain a legal requirement, ensuring that employers cover public transit costs for commuting employees, though specific obligations may vary depending on collective bargaining agreements.
The picture is slightly different in Mexico, where financial wellbeing and literacy benefits are less popular. While wealth-focused benefits are slowly being introduced for executive-level leaders, they remain less common for non-senior employees. Instead, consolidated multinational companies are carefully maintaining robust benefit provisions and making gradual refinements rather than major cuts. Meanwhile in industries such as tech and finance, there is still demand for alternative benefits. Pablo Márquez, Head of Employee Benefits at Howden Mexico explains: “These companies are looking for alternative, ‘out of the box’ solutions, and they’re willing to invest in new benefits that could improve quality of life.”

Personalisation and flexibility

Despite some variations, one consistent trend across Latin America is the growing appetite for flexible benefits packages among both employers and employees.

Employees favour customisable options that reflect their unique lifestyles, health needs and financial goals, which means personalisation is becoming the norm.  

“Right now, all rigid benefits programmes are high risk and should be avoided,” warns Claudia. “Inflexible benefits programmes can cause problems for companies trying to attract and retain the best recruits as they make it harder to meet individual employee requirements.”

For multinational businesses, this is all the more significant. A one-size-fits-all approach to benefits can’t account for the different political, socio-economic and cultural contexts in which each branch operates. The aim should be to create equitable – not identical – benefits packages, and this requires a high degree of flexibility.

The challenge of maintaining flexibility

Transitioning to a flexible model does pose some logistical challenges. Balancing different employee needs, managing costs and continually adapting to changing expectations is no easy task. 

Factor in local regulations, taxes and even cultural preferences, and it’s clear to see how delivering flexible benefits across each region can be a difficult undertaking.
That’s where working with a multinational benefits consultant like Howden can make all the difference. With an international network of local experts, we can provide both a global and regional perspective. Not only does this mean we can advise on well-tailored benefits packages for specific teams, but we can also ensure consistency and fairness for employees across every region.

With a strategic approach that considers global and local factors, multinational companies can create equitable corporate benefits plans to attract and retain high-performing employees.