FEAR OF FINANCE

Employers have spent the last 15 years slaying the union dragon, with a little help from Baroness Thatcher. They have been rewarded by success in holding down wage costs. Even in a recovery, earnings are barely keeping pace with inflation. But what workers have failed to wrest from employers through pressure tactics, the financial services industry is about to try to do by a combination of flattery and cajolery.

IFA Promotion, the umbrella group that represents 15,000 independent financial advisers, this week praised British employers for being among the best in the world, providing pounds 69bn worth of benefits last year, an average of pounds 3,200 for every employee, and 12 per cent of gross national product.

The total includes pounds 21bn worth of contributions to pension funds and more than pounds 23bn in social security contributions, mainly National Insurance payments on behalf of their employees. Another pounds 16bn is listed under benefits in kind, which includes pounds 5bn worth of cars and motoring, pounds 3.6bn in subsidised catering, pounds 2.2bn worth of help with house relocation, and pounds 1bn worth of tied housing. A further pounds 7bn is listed under training, while medical and other insurance benefits amount to less than pounds 1bn.

Over the past decade, pension payments have increased by 50 per cent, social security contributions have roughly doubled, income in kind has quadrupled and training has more than trebled. Benefit payments have grown faster than earnings.

But the IFA warns that there is no room for complacency. Although the message on declining state benefits is unmistakable, individuals are not coming forward to take up the burden of financing an increasing proportion of future pension, health insurance and long-term care costs in anything like the necessary numbers. A substantial shortfall in provisions seems inevitable.

IFA Promotion wants to persuade employers that they could, should and will have to assume a bigger share of the burden that the state is determined to unload. By European standards they get away lightly. Unfortunately, employers are not in a mood to increase their share of contributions. Large companies increasingly treat their workforces as a short-term resource. Smaller companies, which are showing growth in employment, are traditionally less generous than larger companies.

Projections for the next five years suggest thatemployers' contributions to pension, health and welfare provision will actually fall slightly, and that the shortfalls will start to widen.