Final answer:
The primary driver of the increasing employee benefit costs is the rising cost of employee health insurance. Additional costs come from retirement plans, contributions to Social Security, and other mandated insurance programs. These issues are compounded globally by the challenge of supporting an aging population with a shrinking workforce.
Step-by-step explanation:
The rising cost of employee health insurance is the principal driver of the increasing cost of employee benefits. Other factors contributing to the rise in employee benefit costs include retirement plans, employer payments to Social Security, unemployment and worker's compensation insurance, and other benefits like Medicare. These costs constitute a significant portion of total compensation per hour paid to employees.
Many companies are facing increased administrative costs associated with running their business, such as hiring workers, administering accounts, and processing insurance claims. Additionally, situations like the COVID-19 pandemic have led to a substantial rise in public healthcare spending.
In a global context, the United States, European nations, and Japan all face similar challenges of providing retirement and health benefits to an aging population with relatively fewer workers contributing to the system, which makes this a difficult public policy decision.