Why Earned Wage Access is the key to employees' financial wellness
Earned Wage Access (EWA) gives employers the ability to ensure employees’ financial stability and boost their morale, say panellists Pushkina Nautiyal and Alpana Dutta on Day 4 of TechSparks 2021.
Employee well-being has become a focal point over the last year and a half, as more employers are starting to consider financial well-being into account, apart from employees’ physical and mental health.
In order to tackle the problem of financial stress faced by employees, enterprises are turning to the concept of Earned Wage Access (EWA), a financial product that enables employees to access a portion of their earned salary at any time before their payday.
To discuss this new-age concept, Pushkina Nautiyal, Head of Marketing at Refyne and Alpana Dutta, Partner at Ernst & Young, deliberated on ‘Earned Wage Access: The Final Frontier of Financial Well-Being’ during YourStory’s flagship event TechSparks 2021.
Understanding Earned Wage Access
EWA is a benefit that allows employees to access their earned salary as and when they need it, explained Pushkina. “Gone are the days when you had to wait for a month to get your salary, but through earned demand pay, employees can access the pay for whatever days they have worked for,” she said.
Speaking on the research conducted by Ernst & Young based on this programme, Alpana said they found that financial well-being is an anchor point that is closely connected to the concept of holistic well-being.
She said, “We urged employees and employers to think about their ability and confidence to meet both planned and unplanned commitments. We found that 74 per cent of respondents found it difficult to cover their expenses through their monthly salary. According to data from the last six months, 73 percent of respondents said they were unable to meet a financial commitment due to a multitude of reasons.”
She added that they found financial well-being wasn’t directly related to the income category, and that liquidity crunch and financial stress was a common theme among all categories. 59 percent of respondents were part of the high-income category, and Alpana said that even though the needs and nuances varied, the stress was consistent.
Highlighting another critical finding from the report, Alpana said that 43 percent of respondents said that they faced a financial shortfall before the mid-month. “We all know enough about the rise of consumerism. Owing to a lot of requirements to maintain a certain lifestyle, we have noticed that people across generations want to access their earned wage ahead of the pay cycle,” she said.
Alpana added that EWA was a concept that resonated with everybody, as it was an affordable method by which financial stability and access can be enabled.
Benefits for employers
Many employers are looking at EWA as a way to attract as well as retain talent. “The report shed light on the fact that 6 out 10 employees would prefer an organisation that offered EWA, so we see EWA playing a big role in attracting talent,” said Pushkina.
Such organisations are the ones working towards tying basic salaries to difficult times, thus working towards increasing employees’ productivity and keeping their morale high.
To fit in the concept with the pay cycle, Alpana said, employers needed to understand how it could be integrated well according to the needs of the employees.
“Different employers could be using it in different ways. There are options wherein there’s no cost to an employer, others where there’s a nominal cost, and also ones where employers can decide what percentage of EWA can employees get access to. The idea is that it shouldn’t break the existing flow of the process for the employer, or make the whole payroll, tax, or compliance process complicated,” she said.
Adding to it, Pushkina said that the programme would fail if employers weren’t able to fit EWA into the existing processes.
“We at Refyne integrate it into the HRMS solutions to make sure that the real-time flow of the data is happening. Towards the end of the month, the process is automated completely without any change to the existing payroll cycle. We have made sure that there are no additional admin processes, and everything that is done is taken care of by us,” she said.
Inspiring implementation
With a decent adoption in certain industries already, Alpana said they received a positive response from employers in regard to integrating the concept of EWA into their processes.
“The FMCG, manufacturing, infrastructure, construction, and real estate industries have started adopting EWA. Other industries like banking, finance, IT and insurance are still experimenting with the idea. The awareness is yet to be widespread, but there have been some progressive employers across industries who have been using the concept for the last 18 months or so,” said Alpana.
However, some employers felt that their employees weren’t mature enough to use the concept constructively.
“But the more they understood the concept, that it’s not only about spending for instant gratification, and that they (employers) could discuss the concept with their employees and determine what percentage of EWA they could provide employees with the access to, they welcomed the concept,” she added.
But is India ready for the concept to be implemented? Refyne has a huge roadmap of how the payouts of informal labour can be integrated into this concept. Pushkina added that she would need a streamline of how their salary is being settled by employers via digitisation and that they are helping a lot of employers in digitising the entire process of employee onboarding.
“We are also looking at having a kiosk set-up where people who don’t have access to smartphones can access their earned salary through these kiosks. There’s a lot of work being done in that regard, but I don’t think EWA is something that has to expand its purview and we have to take the onus of working with employers,” she said.
Refyne provides one of the cheapest products in the market, where transactions cost start from Rs 9, which would be levied if a transaction of up to Rs 300 is made. She said that the cost goes up to Rs 199, in case transactions of more than Rs 10,000 are made by employees.
“We have an entire slab-based pricing system, and we are proud that we offer the most economical product that people can find in the market. We also have lots of rewards and cashback to make sure there’s a lot more that users can access when they make transactions on the platform,” added Pushkina.
Both employers with a small as well as a large employee base made good use of EWA, or were open to using it, Alpana noted.
Adding to her thoughts, Pushkina said that the entire technology is built on organisational structure. “We have been able to take EWA and build a second layer on top of the existing processes. So, we have gone live with enterprises that have more than 50,000 employees,” she concluded.
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