This weekly compilation of stories from wire services, newspapers and other sources is intended to keep Mercer employees and registered visitors to mercer.com informed of benefits, compensation and HR developments around the world. Facts have not been independently verified, and opinions expressed are those of the editor. Readers are invited to clarify, correct or expand on these items.

East Africa

EAC clarification on work permits
EA Business Week

In advance of the entry into force of the Common Market Protocol tomorrow (IH 06/23/10), East African Community officials have flagged erroneous press reports on the work permit system. People may obtain work in another member state without work permits only for stays of less than 90 days. They are still required for longer stays. The EAC Secretary General said that the arrangements for member state transposition of the protocol and the prospect of  EAC Council of Ministers conducting "interventions...to speed up the process" remain uncertain.

Kenya

Workers’ rights under the draft constitution
The Nation, Alsahid
The government and the Central Organisation of Trade Unions (COTU) are campaigning for passage of a new constitution that would guarantee fair pay, fair working conditions, the right to form unions and the right to strike. While the constitution has majority support, ugly conflicts over certain other provisions cloud its future.

Rwanda

Anti-smoking bill
New Times, GLM

The Health Minister has delivered a bill to Parliament that would ban smoking in all public enclosures. A manager of an establishment would be allowed to create a smoking area, provided that it kept the smoke away from the non-smokers.

Australia

Uncertain status for health reform plan; Gender Equality Blueprint
SNS, The Australian, The Age
The Health Minister delivered legislation covering key aspects of the Prime Minister's health reform plan (IH 04/21/10) to Parliament last Wednesday.  Later that day, the Prime Minister was unseated in a no-confidence vote that was directly attributed to another issue but reflected dissatisfaction with health reform. The administration evidently will not meet its July 1 deadline for the first stage of implementing the reform. The Health Minister continues to promote the reform but a recent Senate committee report characterized deals with individual states as a “massive political compromise” that undermined the plan’s intent. On a positive note, Parliament has passed health care identifier (IH 06/16/10) legislation. There will be a federal election by the end of this year and health reform will be a central issue.

Also, the Sex Discrimination Commissioner introduced Gender Equality Blueprint 2010 last Wednesday. It sets out an array of recommendations supporting workplace equality and life/work balance. These include 2012 amendments to Paid Parental Leave Act 2010 (IH 06/23/10) that would provide superannuation on paid parental leave, create a two-week paid paternity leave entitlement and ultimately build up to a year of paid parental leave shared by both parents. It augurs well that later that day Australia appointed its first female prime minister.

Bangladesh

Bill would set regulatory framework for minimum wage
The Independent, UNB, Financial Express

Violent protests in the garments sector have prompted Parliament’s Standing Committee on Labour and Employment to call for a “time-befitting minimum wage structure” (IH 01/07/10) by July 29. The Labour Ministry has convened a tripartite group find common ground on this issue. At this point, workers are holding out for Taka 5,000 (US$86) per month, while employers are proposing Taka 1,600.

India

ULIPS developments
AIR, Business Standard, Financial Express

The President has settled the ULIP (unit-linked insurance policy) jurisdictional dispute with an ordinance declaring that ULIPs are insurance products to be regulated by the Insurance Regulatory Development Authority (IRDA). IRDA has issued draft regulations setting new ULIP standards, including the requirement that a minimum ULIP cover should be 10 times the first year premium. It has also determined that a pension offered in a ULIP has three options for bundling (IH 06/23/10): health insurance, life insurance or an annuity. There’s one more factor rattling the ULIPs market. The latest draft of the Direct Taxes Code (IH 06/23/10) in the course of granting a blanket tax exemption to all retirement schemes excluded ULIPs because they’re a hybrid product, actually stripping them of their tax exemption on distributions. The insurance industry will lobby for equal treatment.

Japan

Family leave extension
Kyodo News

The Child Care and Family Care Leave Law (IH 07/01/09) comes into effect today. Much of the law’s mission is to help both parents achieve a better work/life balance. It’s worth noting that the extension of parental leave from 12 months to 14 is contingent on the parents sharing the leave. Revised guidelines on work/life balance - due here soon - include targets for higher male participation in parental leave.

Korea

Pension, severance pay entitlements for smaller companies; Streamlining employment subsidies
KBS, Chosun Ilbo, Koilaf

The Ministry of Labor plans to amend the Enforcement Decree of the Employees Retirement Benefit Security Act to extend pension and severance pay entitlements to companies with fewer than five employees. A worker would have to be with the same establishment for at least a year to qualify. The measure would take effect on December 1, 2010, and the benefit would be phased in over the following years, not reaching full strength until December 2013. Also, the Labor Ministry will be revising the Employment Insurance Act in the second half of this year to consolidate 16 different job market subsidies into a small group of complementary incentives. The changes are slated to take effect on January 1, 2011.

Lebanon

Social security, employment rights for Palestinians
Daily Star, Arab News, Ma’an News

Parliament is debating legislation that would entitle the large contingent of Palestinian refugees to social security benefits, grant them protection under employment law and give them access to various professional occupations that have been closed to them. Legislators are trying to strike a balance between equal rights for their long-term guests and the political instability that would ensue if this proved a slippery slope to naturalization.

Malaysia

Consultation on labour law amendments
Bernama

The government has started tripartite consultations on a package of labour law amendments (IH 04/21/10) that alarmed the Malaysian Trades Union Congress (MTUC) when first introduced last April. The MTUC remains skeptical, but has deferred strikes until the consultations are over and it has taken the opportunity to press for stronger occupational safety laws, including worker education standards and better enforcement.

Myanmar

Trade unions illegal for now
The Irrawaddy, Mizzima, DVB

The authorities have turned down the request of a group of workers who sought to form a trade union. The 1926 Trade Union Act remains in force but the 2008 Constitution’s endorsement of unions is conditional on their not being a threat to “community peace and tranquility.” Organizers were advised to delay their application until the new People’s Assembly is formed. Elections are tentatively set for October.

Philippines

Expanded Senior Citizen Act of 2010
GMA, Manila Bulletin

The senior support measures unveiled by the Bureau of Internal Revenue earlier this month (IH 06/16/10) proved to be part of the implementing rules and regulations that the Department of Social Welfare and Development announced in advance of the July 6 launch for Expanded Senior Citizen Act of 2010. Additional benefits under the new law include a default monthly pension of P500 (US$10.77) and a P2,000 death benefit.

Taiwan

Flexible hiring for foreign workers
China Post, Focus Taiwan, Taipei Times
The Council of Labor Affairs (CLA) has outlined plans to allow companies to hire foreign workers directly without having to pay a broker. There would also be opportunities to raise foreign worker quotas at companies that have robust local hiring practices.

Tajikistan

Pensions and wages rise
ASIA-plus, BBC

A Presidential decree will, effective July 1, raise the monthly state pension and the minimum wage by a third, from 60 somoni  to 80 (US$20). The pension hike will be covered by surplus funds from the federal budget.

Vietnam

Labor Code revisions get more ambitious
Saigon Times

A Labor Ministry official has advised the press that the scope of Labor Code repairs (IH 06/16/10) will require delaying its delivery to the National Assembly until next year. We are told to expect “big changes” in industrial relations, working hours, gender equality and wages laws as well as significant streamlining of administrative requirements. A few details were shared. Employment contracts would not be necessary until a worker’s probationary period was over and disabled worker quotas would be removed.

Austria

Pay equity bill
Planet Labor
The Minister for Women’s Affairs announced that social partners have endorsed draft legislation that would ultimately require medium and large companies to disclose the average wages of men and women in annual reports (IH 07/15/09) to their works councils. Enterprises with at least 1,000 employees would have to start the reports in 2011. The requirement will gradually spread to smaller companies, stopping at those with at least 150 employees in 2014. The bill will be submitted to the National Council this fall.

Belgium

See: EU, Bullet 1

Bulgaria

Labour Code amendments
Focus, BTA
Parliament has approved a handful of anti-crisis measures (IH 06/09/10) that will amend the Labour Code:

• A schedule of fines for occupational safety violations was deemed overly punitive for setting a 10,000 leva (US$6,290) minimum fine. The new range will be 1,500 to 15,000 leva.
  
  
• Unpaid leave carryover from before January 1, 2010, will have to be used by December 31, 2011. Employers would be responsible for setting annual limits on leave carryover in succeeding years.
  
  
• The option of up to six months of reduced working hours is a temporary measure that will expire on December 31, 2011.
  
  
• Another provision expiring on that date will double to 90 days the period that a worker may be reassigned to another job.

Croatia

Petition drive successful
Croatian Times, SETimes, HINA

The unions have collected enough signatures to force a referendum on the Finance Minister’s proposal to default to individual contracts when collective bargaining misses a deadline for agreement (IH 06/09/10). Croatia’s new constitution is unclear on the referendum process, so the timing is not certain. Meanwhile, the draft legislation will be submitted to the current session of Parliament.

Czech Republic

Coalition agreement preview
CTK, PDM
The center-right coalition that is virtually certain to conclude negotiations on a new government (IH 06/09/10) this week has announced that the parties will sign a coalition agreement by July 7. It has reported agreements on several more issues:

• It would remove the two-year limit on fixed-term contracts.
  
  
• The severance pay formula would be modified for people employed for less than two years.
  
  
• The 150-hour annual cap for odd jobs that are exempt from the health and social insurance levy would double to 300 hours.
  
  
• The current pension indexing method would be preserved and the coalition has refuted reports of a temporary freeze on benefits.
  
  
• Generic drugs would be promoted.
  
  
• Physician pay would be based on quality of work rather than seniority.

EU

Pensions Green Paper held up; AIFM vote delayed; Various
Global Pensions, Euractiv, IPE
After harsh responses from the pension industry to the solvency proposal in a leaked draft of the Green Paper on pensions (IH 06/23/10), the European Commission took it off last Wednesday’s agenda. Officials would not commit to a release date for the final version of the document, but it is said to be unofficially set for July 7.

Also, negotiations between legislators and the Council of Ministers on the Alternative Investment Fund Managers (AIFM, IH 05/19/10) Directive have reached an impasse, so the July plenary vote in Parliament is suspended. The chief sticking point is still whether the EU “passport” arrangement (IH 04/14/10) that would set terms for non-EU alternative funds to compete in the local market is protectionist.

In other news:

• The Belgian Presidency starts tomorrow and Belgium remains at least a couple of months away from forming its own government. Fortunately, the caretaker government is familiar with the Programme of the Belgian Presidency and  Belgium is the middle link in the EU trio, an 18-month stretch of presidencies that has set a common agenda. There are broad statements in the agenda about health, pension and employment market reform. While there is no specific mention of enlargement, it is understood that Belgium aims to expedite the process for Croatia and Iceland.
  
  
• A third of Parliament has signed a petition on amending the Working Time Directive with a provision that would make Sunday an official day off throughout the EU. The petition was circulated by the 72 organizations united in the campaign “Mum and dad belong to us on Sunday.”
  
  
• A review of compliance with the Services Directive acknowledges that this one is particularly difficult for member states to transpose, but notes that 12 states were recently sent reasoned opinions for insufficient progress in their efforts.

France

More pension reform details emerge; Various
AFP, Reuters, Tax Analysts
The press has published additional information on a reform package that features but isn’t limited to pension reform (IH 06/23/10):

• Companies with over 300 workers would have to produce annual reports on their progress in setting equal pay for men and women.
  
  
• The incentive for hiring workers over age 55 for at least six months is a waiver of social security premiums.
  
  
• An occupational health record would document those factors over the course of one’s career that posed health risks. Early pension applications based on arduous occupations would now have to show some level of “occupational wear and tear” or partial disability.
  
  
• Private and public sector pension contributions would gradually be harmonized, but the public sector would still receive higher benefits.
  

In other news:

• Last month, the Labour Ministry took a two-pronged approach to bolstering the new law (French only) on action plans for the employment of older workers (IH 01/13/10). The 1% of total payroll penalty was issued to 163 noncompliant companies and the Labor Minister met with representative of several major companies to publicize (French only) best practices in developing action plans.
  
  
• The Senate recently passed (French only) a measure that gives multinationals guidance on complying with the obligation to redeploy workers who would otherwise be made redundant. The employer must ask the worker whether reposting options should be limited to the home country. Either way, the alternative job should pay a comparable salary.
  
  
• A National Assembly committee on dependency has proposed compulsory private long-term care insurance to protect the elderly for the contingency of nursing home care if they can no longer be independent. This would replace the personal care allowance (APA) which is deemed no longer adequate.

Germany

Ruling on “wage unity”
Financial Times

The nation’s highest labour court recently ruled that individuals are not bound by the “wage unity” tradition under which a company and its top union negotiate a pay deal for all employees in the same range of occupations as the union members. Employers and unions have responded with a joint proposal for a bill to legalize existing agreements and the government is considering legislation in defense of this practice.

Greece

Cabinet approves pension reform; Health reform bill
Kathimerini, ANA, Reuters
The Cabinet has endorsed pension reform legislation (IH 06/09/10) incorporating some labour reform measures and has forwarded it to Parliament where a vote could come as early as this week. At this late stage, some provisions have been modified while others remain unresolved:

• The minimum contribution period would rise to 40 years by 2015.
  
  
• Reports vary on whether the Easter and Christmas (13th and 14th month) pension bonuses have survived in this draft. According the the latest accounts they would be replaced by a flat annual bonus of €800 per year for pensioners earning below €2,500 per month.
  
  
• A late amendment would raise the notice period from four months to six for workers employed over 20 years.
  
  
• The retirement age hike for women would be a bit less sudden than described in earlier accounts. It would rise from 60 to 65 by 2013.
  

The draft health reform bill (IH 06/16/10) was released in Parliament last week, where it came under attack from both right and and left wings. Strong measures to upgrade quality of care and keep hospitals well-supplied are allegedly short on detail and stakeholders are particularly alarmed over a sketchy section about giving private health insurance firms a role in the public health system.

Iceland

Same-sex marriage law
The Jurist, Reuters, GLM
Parliament has unanimously approved a measure (Icelandic only) that legalizes same-sex marriage by making the marriage law gender-neutral. The bill went into effect on June 27. The Prime Minister married her partner on day one.

Ireland

Banking sector pay supervision; Collective bargaining debate
Irish Times, BFDN, Irish Examiner

The Central Bank has issued a paper outlining its new approach to banking supervision. Management bonuses would be linked to long-term performance goals. Also, the Fine Gael and Labour parties support a proposal to make collective bargaining a statutory right. Labour and management disagree vehemently on this one and there is some confusion over whether the Lisbon Treaty requires it.

Italy

DC plan guarantee proposal; Language test for immigrants
ANSA
Two officers of the Bank of Italy have published a working paper proposing that the government sponsor a scheme to provide a guaranteed minimum return to defined contribution plan members. The fund would be financed with risk-based premiums. The return would be 0% - assuring that contributions aren’t lost – or some common peg like GDP growth. The authors have made a disclaimer that the proposal is their opinion, not that of the administration.

Also, a press release from the Ministry of Interior outlined a new decree on requirements for long-term residency permits. Applicants for a lengthy stay will receive a two-year permit and must take a course on Italian culture and pass a test on the basics of the Italian language within two years in order to extend the permit.

Netherlands

Priorities for incoming and outgoing governments
DutchNews.nl, Expatica, IPE
None of the coalition government options have gelled yet (IH 06/09/10) but various contingents continue to press their agendas:

• The three main pension associations have sent the next government’s future formateur a statement (Dutch only) proposing reforms to the FTK financial assessment framework.
  
  
• The Cabinet has approved a measure that would set an 18-month cap on carryover for statutory vacation days. Carryover of days above the statutory annual minimum would not be affected by this bill.
  
  
• The parties that are most likely to have a role in the next government are all said to favor raising the health insurance system’s “own risk element” annual deductible as well as introducing some new copayments.

Romania

Constitutional Court rejects some pension reform measures; 2d pillar contributions to rise; Tax Code amendments
Mediafax, AFP, IPE
The Constitutional Court voted against two of the five austerity package measures that it was asked to review. One was a 15% cut in pension benefits. A revised austerity package with most other pension reform measures intact will not reach Parliament until September.

Another major adjustment to the austerity package – this one reportedly negotiated with the International Monetary Fund – drops the plan to cut the 2.5% mandatory private pension contribution to 0.5% for the next 18 months (IH 06/03/10). Instead, the contribution will restart its delayed climb with a rise to 3% at the start of 2011.

Also, an emergency ordinance (Romanian only) adopted on June 23 will introduce a variety of Tax Code amendments, effective July 1. A number of tax-exempt perquisites, including holiday tickets, meal tickets, gift tickets and nursery tickets, will now be included in taxable salary but will not be subject to social security contributions. Severance pay for laid off workers will also be subject to income tax.

Russia

Retirement age hike trial balloons
Moscow Times, Itar-Tass, Interfax

The Finance Minister, the Health Minister and the Labor Minister are among the officials making nuanced statements about a retirement age hike being inevitable, but not right away (IH 01/21/10). All, including the Finance Minister, have backed away from a proposal attributed to the Finance Ministry that would have lifted the retirement age from 55 for women and 60 for men to 65 for both. The Labor Minister has recommended introducing strong incentives for retirement deferral in 2015.

Spain

Special session for labour reform bill amendments; Copayments and shadow invoices
El Pais, GIDA, Dow Jones
A parliamentary spokesman said that legislators will work through their traditional August recess to ensure that the amendment process for the administration’s labour market reform decree (IH 06/23/10) stays on track for completion in early September.

Also, the Health Ministry has drawn up some options for reining in medical inflation. The draft copayment schedules for office visits or medical procedures are admittedly a hard sell. One approach would have a sliding scale with fees based on ability to pay. Another, one that can be introduced without debate, would have symbolic “shadow invoices” issued to patients to sensitize them to the cost of care.

UK

Auto-enrolment, retirement age consultations; Various
Professional Pensions, Daily Telegraph, IPE
The Department for Work and Pensions (DWP) has outlined an initiative to “reinvigorate retirement.”  The first stage includes a three-month independent commission review with stakeholder consultation Making automatic enrolment work: Terms of reference. The commission will assess the National Employment Savings Trust (NEST) and evaluate the scope of auto-enrolment, including the possibility of age limits, company size limits and vesting periods (IH 06/23/10). The review is being kept brief because the DWP has not set out to disrupt the timetable for a 2012 launch, but the schedule is subject to review. The DWP has also released the public consultation When should the state pension age increase to 66?” A call for evidence, which has a cut-off date of August 6, 2010. A consultation on phasing out the default retirement age (DRA) is reportedly in the pipeline.

In other news:

• The European Commission has sent the UK a formal request over benefit restrictions on UK citizens residing in other European countries. Its restrictions on Disability Living Allowance, Attendance Allowance and Carer’s Allowance violate EU rules on coordination of social security.
  
  
• The Bank of England’s bi-annual Financial Stability Report warns banks that they will have to restrain the still-growing management bonuses or authorities will proceed with plans to regulate remuneration for the sector.
  
  
• The Court of Appeal has ruled that a male to female transsexual was qualified for a state pension upon reaching the female retirement age of 60 in 2002.
  
  
• Mercer has published analysis of last week's Emergency Budget (IH 06/23/10).
  

Canada

Amendments to private pension plan regulations
Ottawa Citizen, Calgary Herald, TNS
The Finance Minister has published a set of final regulations (IH 05/05/10) amending Pension Benefits Standards Regulations 1985. 

Under the new rules for federally regulated pension plans:

• A three-year average solvency ratio for calculating minimum funding requirements presents a significant relief from current solvency ratio
  
  
• Employers may not take contribution holidays unless the solvency ratio tops full funding plus a new 5% solvency margin.
  
  
• A liberalized investment regime features removal of the lid on property investments.
  

The Office of the Superintendent of Financial Institutions (OSFI) has posted companion guidance on the filing deadline for actuarial reports and an amendment to the rules on the frequency of actuarial reports.

Costa Rica

Privatizing workers compensation insurance
BNamericas, Global Insurance, El Financiero

The private sector has gradually penetrated the insurance market since the 2008 decree privatizing insurance (IH 08/13/08). From January 1, 2011, workers compensation insurance will be subject to private sector competition. Insurance regulator Sugese will issue a report in July on how INS, the state insurer responsible for workers compensation, will function in the marketplace. There has been concern that the private sector will cherry-pick the lower risk companies.

US

Pension funding relief bill; Various
AP, Tax Analysts, NYT
Congress has passed and the President has signed H.R. 3962 Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, an extract from S AMDT 4310 (IH 06/23/10) featuring its pension funding relief measures. The two options for cushioning investment losses of recent years are paying just interest for any two plan years between 2008 and2011 and amortizing the liability over seven years or taking 15 years to amortize liabilities. These actions must be disclosed to the Pension Benefit Guaranty Corp (PBGC). Critics of the bill warn that greater tolerance of underfunding places the PBGC at risk.

In other news:

• The House-Senate conference committee on the financial reform bill (IH 05/27/10) has approved Dodd-Frank Wall Street Reform and Consumer Protection Act, a compromise version of the bill that could pass in both houses as early as this week. The hedge fund and private equity regulation measures are still there as is a federal monitor for the insurance sector, but a 36% usury cap on credit card interest rates was lost. Nonbinding shareholder votes on management remuneration and golden parachutes also remain in the bill.
  
  
• Interim final rules comprising a Patient’s Bill of Rights under the Affordable Care Act (IH 03/24/10) have now been released. Comments are welcome through August 28.
  
  
• The Department of Labor (DOL) has announced the publication of Wage and Hour Division Administrator’s Interpretation No. 2010-3, which clarifies the definition of “son and daughter” under the Family and Medical Leave Act to extend leave eligibility to anyone in a parenting relationship.
  

Chile

IFRS postponed for insurance industry
BNamericas
Insurance regulator SVS announced (Spanish only) that last February’s earthquake has compelled the insurance sector to delay by one year the adoption of International Financial Reporting Standards that had been set for January 1, 2011. A revised timetable for introducing IFRS will arrive later this year.

Peru

Low risk investment fund; Higher ceiling for foreign investments
BNamericas, EMII

Congress’s Economy, Banking and Insurance Committee supports legislation that would complement the three standard investment options in AFP private pensions with a minimal risk fund comprised of fixed-income investments (IH 07/22/09). The next step is a plenary vote. Also, the limit on foreign investments for AFPs, which rose from 22% to 24% earlier this year (IH 02/03/10), inched up to 26% in mid-June.

ILO standard on HIV/AIDS

Daily Independent, GLM
The International Labour Organisation has adopted a Recommendation on workplace issues involving HIV/AIDS, which it will deliver to all national governments. It covers a range of discrimination and privacy concerns.

Mercer International Headlines is published by the US international consulting practice library of Mercer. Comments or queries may be directed to Patrick Sweeney at +1 212 345 2462. Click here to find your local Mercer office.