A Retroactive Impact Analysis of Changes in Social Benefits: The Case of Venezuela

For organizations facing changes in a social benefit system that mandates employer contributions, a major problem facing decision-makers is forecasting the impact of those changes for companies in different sectors of the economy. Such is the case in Venezuela at the time of this study. When a company employs a relatively large number of employees, accurately determining the impact of the maximum it can be quite laborious and complicated. The processing of information on an individualized basis can be nearly impossible when facing time constraints, making the development of a model imperative. In this research study, we tackle the issues raised above by identifying key variables. The impact is then explained using a reduced multivariable statistical model. This study has used a proprietary data set to model a methodology for measuring the rigor of these regulatory changes. Three key explanatory variables – the number of employees; the cumulative warranty; the monthly average full salary – are analyzed to determine the impact on those companies. Among these, the most important variable and in terms of statistical significance is the amount of accumulated warranty at five percent, followed by the salary and lastly the number of employees in the company.