You pay your employer for days off. That's the most American thing I've ever heard.
How about Americans start demanding tens of days of paid time off like in developed countries
How about Americans start demanding tens of days of paid time off like in developed countries
I know, very un-American to even think of that.
It's so funny (actually, mind-boggling) when you first hear about how time off works in lots of North American companies. You get 10 days and then with tenure you get one more day per year. If you're working for a "good" company, you might start with 15 and get 1 per year. But always only up to a max, e.g. after 5 years of tenure, that's it, no more extra days.
And the excuses and explanations employees make for this are mind-boggling. Like "yeah this makes total sense, you wouldn't want to give a recent-grad the same time off as someone with more experience" and such. To which I can just only reply: Why not?
It usually has less to do with experience than it has to do with "time served". A company wants to incentivise their employees to not quit.
If I have 10+5 max from tenure and I am in year 2, why would I stay at your company instead of jumping ship to another company that offers 15+5? Or even just flat 15 for that matter.
What's next, you incentivise me not to quit by my health plan only paying 50% of the bills, going up by 10 percentage points with each year of tenure?
Of course much of this gets muddled up in the general overwork culture. Culminating in the 'unlimited vacation' policies that use social pressure to not be 'the guy' that took the most vacation.
It's a free market so the employee can go to another company that has a better benefits package, as you implied. It happens all the time, although I would guess that higher pay is a greater incentive than more vacation days (in the US, anyway).
And yeah, an employer has the option to give great full benefits from day one if they think it benefits their company. That happens all the time, too.
Another example in the US that you probably won't like: as a benefit, your employer normally matches a percentage of 401k retirement contributions. But, if you quit you won't get the full amount they matched unless you're fully vested (normally takes at least 2 or 3 years). Rather than striking or unionizing for better benefits, I would rather decouple 401k from employers completely.
For health care, the current situation already stinks. Companies reevaluate their health care plan every year and frequently hop to new providers/plans in order to cut costs. In the meantime employee benefits are always changing. It's not based on tenure, either, so you don't have a sure way to predict what your health care costs will be next year. I would prefer to also decouple health insurance from employers completely.
I bet most employers would prefer not to have to deal with health insurance providers and 401k plan providers anyway.
As far as I know there aren't any group RRSPs in Canada with vesting periods. The matched amount goes straight into your RRSP (even if they do show the employee and employer portion separately but it's yours to keep for sure). I definitely would love to have those detached fully from employers in the sense that group RRSPs weren't a thing. The investment options inside those are very limited. Unfortunately so far I know of no company that will send an RRSP match to your own individual RRSP but at least individual RRSPs are a thing and have many providers with lots of investment options to choose from. There are some employers though that have group RRSPs that allow you to transfer out at least your own contribution after a short time frame, thus only keeping the matched part locked up in high fee investments.
And yeah agreed on the health plan situation. Same here. Always funny to see the "great news, your health plan got cheaper next year" updates. Never mind that the cheaper plan also pay 80% instead of 100% of certain items. That said, in Canada you aren't completely SOL if you don't have an employer plan and there's still some health care available to you through the provincial insurance programs even if those aren't that great either.
While we're comparing and because I mentioned the great PTO landscape in Germany, the above is still much better than what Germany has for retirement savings (caveat: haven't been employed there for a looong time, so maybe this changed and this is just about the private portion. There's still the regular state pension, not that this is to be expected to be much given how the system works and what demographics are doing to that model). There are private, partially tax sheltered ways to save from your gross income but it's all going to be locked up in some insurance company's "product" until retirement. Including high fees, putting all the risk on you etc. Sort of like a group RRSP but with even worse options and conditions and there's no equivalent of an individual RRSP where you can do whatever you want in a tax sheltered way.
While we're at it, even though we're going quite a bit off topic by now:
Does the US have an equivalent of the TFSA (tax sheltered gains/dividends/interest but you can only contribute after tax money and a max amount per year), which you could use instead of the 401k to some extent?
Germany does not for example. Instead you have a measly 801 EUR of "tax free capital gains". That's the amount of actual gains/dividends/interest per year. So in Germany if you did everything right and started saving for yourself early on and your investments are making say 15000EUR in dividends each year, you gotta pay 25% tax on 14199EUR of those and only receive ~11450EUR. If I did the same in Canada inside a TFSA, I get the full 15000CAD to use or reinvest. That's quite a difference over some years.
It is possible to open an individual traditional IRA, which is also tax-deferred, but the contribution and income limits are worse than the 401k. A person can have both a 401k and a IRA at the same time, too, so if you don't have an employer that offers a 401k plan then you just miss out and there's no way to replace it.
> Does the US have an equivalent of the TFSA?
I think that would be a Roth IRA, which holds after-tax contributions and allows tax-free withdrawals. It's nice, but it also has low contribution limit and income limits. However, there are games you can play with to get money into a Roth like backdoor conversions, or rollovers from a 401k on years with low income.
> in dividends each year, you gotta pay 25% tax
Yeah that's harsh. In the US you normally pay long term capital gains tax on dividends, which is based on income and maxes out at 20%. If your total income is less than 80k, the rate is 0%.