Why Earned Wage Access is the key to employees financial wellness
Worker wellbeing has become a focus in the past year and a half as more employers begin to consider financial wellbeing in addition to the physical and mental health of workers.
To address the problem of the financial burden on employees, companies are turning to the concept of Earned Wage Access (EWA), a financial product that enables employees to access part of their earned salary anytime before their payday.
To discuss this new age concept, Pushkina Nautiyal, Marketing Director at Refyne and Alpana Dutta, Partner at Ernst & Young, advised on ‘Access to Earned Wages: The Final Frontier to Financial Wellbeing during the flagship event of YourStory TechSparks 2021.
Understand access to paid wages
EWA is a benefit that enables employees to access their earned salary when they need it, explained Pushkina. “Gone are the days when you had to wait a month to receive your salary, but the on-demand pay earned gives employees access to pay for the days they worked,” she said.
Referring to the research carried out by Ernst & Young based on this program, Alpana said that financial wellbeing is an anchor point closely tied to the concept of holistic wellbeing.
She said: “We urged workers and employers to reflect on their ability and confidence to meet both planned and unplanned commitments. We found that 74 percent of respondents had difficulty covering their expenses with their monthly salary. According to data from the last six months, 73 percent of those surveyed said they were unable to meet a financial obligation for a variety of reasons. “
She added that financial well-being was not directly related to income category and that liquidity constraints and financial stress were a common issue across all categories. 59 percent of the respondents belonged to the high income category, and Alpana said that despite the different needs and nuances, the stress was constant.
Alpana highlighted another key finding from the report, saying that 43 percent of respondents said they faced a financial squeeze before mid-month. “We all know enough about the rise in consumption. Because of the many lifestyle requirements we have found, across generations, people want to access their earned wages before the wage cycle, ”she said.
Alpana added that EWA was a concept that resonated with everyone as it was an affordable way to provide financial stability and access.
Benefits for employers
Many employers see EWA as a way to attract and retain talent. “The report highlighted the fact that 6 out of 10 employees would prefer an organization that offers EWA, so we see EWA play a huge role in attracting talent,” said Pushkina.
Such organizations are the ones that work to tie the base salary to difficult times in order to work to increase employee productivity and keep their morale high.
In order to fit the concept into the wage cycle, Alpana says, employers need to understand how to integrate it well according to the needs of workers.
“Different employers could use it in different ways. There are options that do not incur any costs to the employer, others that incur nominal costs, and some where the employer can decide what percentage of the EWA employees will have access. The idea is not to interrupt the existing process flow for the employer or to complicate the entire payroll, tax or compliance process, ”she said.
Pushkina added that the program would fail if employers couldn’t integrate EWA into existing processes.
“At Refyne, we integrate it into the HRMS solutions to ensure that the flow of data takes place in real time. Towards the end of the month, the process will be completely automated without changing the existing billing cycle. We made sure that there are no additional administrative processes and that everything that is done is done by us, ”she said.
Given that there is already decent uptake in certain industries, Alpana said it has received a positive response from employers regarding incorporating the EWA concept into their processes.
“The FMCG, manufacturing, infrastructure, construction and real estate industries started with the introduction of EWA. Other industries such as banking, finance, IT and insurance are still experimenting with the idea. Awareness is not yet widespread, but there are some progressive employers in all industries who have been using the concept in the past 18 months or so, “Alpana said.
However, some employers felt that their employees were not mature enough to use the concept constructively.
“But the more they understood the concept that it is not just about spending money on instant gratification, and that they (employers) could discuss the concept with their employees and determine what percentage of EWA they allow their employees to access they welcomed the concept, “she added.
But is India ready to implement the concept? Refyne has a comprehensive roadmap on how informal labor disbursements can be integrated into this concept. Pushkina added that she would need employers to optimize payroll through digitization and that she is helping many employers digitize the entire process of employee onboarding.
“We are also considering setting up a kiosk where people who do not have access to smartphones can access their earned salaries through these kiosks. Much is being done in this regard, but I don’t think EWA needs to expand its scope and we need to take responsibility for working with employers, ”she said.
Refyne offers one of the most affordable products on the market with transaction costs starting from Rs 9 that would be charged on a transaction of up to Rs 300. She said the cost would rise to 199 rupees if transactions of more than 10,000 rupees were made by employees.
“We have a complete disk-based pricing system and pride ourselves on offering the most economical product people can find on the market. We also have plenty of rewards and cashback to ensure that users can access a lot more when transacting on the platform, ”added Pushkina.
Both employers with a small as well as a large workforce were using EWA well or were open to it, Alpana noted.
Pushkina added that all of the technology is built on top of the organizational structure. “With EWA, we were able to set up a second shift on top of the existing processes. So we went live with companies with more than 50,000 employees, ”she concluded.
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