Purchasing power: How employee benefits can help mitigate inflation
20 de February, 2025
It’s unavoidable: the general increase in prices has a direct impact on the purchasing power of workers and families. In 2021, the inflation rate began to rise gradually and, although there has been a slowdown since 2023, the truth is that prices continue to rise.
The European Commission’s economic forecasts predict an inflation rate of 2.1% in Portugal by 2025 and several essential goods have already seen the usual increase at the start of the year.
In this context, employers must take a proactive role in anticipating and supporting the challenges faced by employees. In particular, employee benefits are a powerful tool for increasing employees’ disposable income in essential areas and helping to improve their quality of life.
1 – Food
The purpose of paying meal allowances is to ensure that employees have access to meals and food so that they can eat nutritiously during the working day.
When awarded through a social voucher or meal card, it ensures that this purpose is fulfilled and, therefore, both the company and the employee have associated tax benefits. In the case of the employee, the total exemption from IRS and TSU up to €10.20/day provides increased liquidity compared to paying the same amount in cash.
If a worker receives €10.20 a day in meal cards, they will earn €325 more per year than if they received the same amount in cash, together with their salary (applying a rate of 11% TSU and 21% IRS). Assuming an average price of €10 per meal, this annual gain corresponds to around 32 more meals.
Find out more about Edenred Meals.
2 – Childhood
Companies can also support the childcare expenses of employees with children under the age of 7. Childcare vouchers, such as the Edenred Creche, are designed to ensure greater liquidity for childcare costs, nurseries, kindergartens and similar establishments.
For this, employers have tax benefits when granting them (total exemption from TSU and a 40% increase in IRC) and also employees when receiving them (total exemption from TSU and IRS).
For example, if the company allocates €1,000 a year to eligible employees – with children or dependents between the ages of 0 and 6 inclusive – they receive the full amount if the allocation is made through Edenred Creche, but only receive €680 net if the allocation is made in cash, together with their salary (considering an 11% TSU and 21% IRS rate).
This can be a valuable help in supporting employees with expenses that can typically represent a large chunk of their family budget.
3 – Education and vocational training
By using employee benefits, it is also possible to increase workers’ purchasing power for expenses related to their children’s education or their own professional training.
Edenred Student, for example, can be used to pay for schools, colleges, universities and similar establishments. Employees can use the amount granted by the company to pay for the education of their children and dependents from the age of 7, or to pay for their own professional training if they wish to complete a certification, course, master’s degree, etc.
Edenred Flexible, on the other hand, is intended for the purchase of books and textbooks, school supplies and computer study aids.
Both benefits are fully exempt from TSU for the company and the employee. As such, if the company decides to grant €1,000 a year through one of these benefits, the employees have an annual gain of €110 compared to paying the same amount in cash (applying a TSU rate of 11%).
4 – Health and social support
As well as being used for education and training expenses, Edenred Flexible also allows you to support employees with their health and senior care costs. This benefit can be used in hospitals, clinics, pharmacies, opticians, nursing homes, day care centers, among other similar establishments.
Health benefits are among the most valued by employees, especially when they can be extended to their families, as is the case with Edenred Flexível. By granting this benefit, companies are facilitating access to health care for their employees and their families, thus promoting their well-being and quality of life.
Again, the associated tax benefits – total exemption from TSU for both company and employee – allow organizations to maximize the liquidity of their employees without increasing the tax burden.