Why Early Wage Access is crucial in achieving financial wellness of employees
Employee satisfaction is inextricably linked to workplace productivity and long-term corporate performance. The financial well-being of Indian salaried employees has been widely addressed, but there is hardly any study on the subject. The majority of employees are still paid on a monthly basis, leaving them financially unguarded. It also makes it difficult for them to meet their immediate needs. Largely there is a requirement of innovation in the way employees are compensated over the years.
Early Wage Access is the need of the hour and a fundamental foundation for employee financial wellness. The intention is to move them up to a point where their obligations are being met, and they can make choices. Living paycheck-to-paycheck exposes employees to financial risks like payday loans and short-term credit facilities, creating a spiral of debt. Employee motivation and retention drop dramatically due to poor financial health. Financial strain and emotional stress caused by a lack of funds can lead to diversions, shopping around for opportunities, & a clear lack of motivation at work. None of this bodes well for productivity.
Timing is everything
But what if an employee could get their compensation earlier? It would certainly relieve some of their financial stress. EWA, being a relatively new and unique concept for the Indian market, is clearly differentiated from the consumer loan, salary advance and payday loans. It is a fintech product that allows employees to access a portion of their ‘worked’ but unpaid wages prior to payday without affecting the payroll process. One of the leading EWA player in sector deploys multi-pronged go-to-market strategies, with no hidden charges. It provides one-time, hassle-free repayment options which enable the user to not go through the hefty process of EMIs & thereby making the entire process simple.
Employees are enthusiastic about the concept of EWA. According to recent reports, over 70% percent of respondents regard EWA to be a deciding factor in their next career move. EWA contributes in retaining employees and attracts new talent. It helps people better align their income and expenses while lowering their reliance on high-interest credit plans. Unlike salary-based lending (advanced salary) or payday loans, EWA does not require the employee to borrow. EWA also provides customers with extra liquidity to manage unforeseen or urgent needs, as well as enabling investment planning and financial well-being. Earned Wage Access liberates both employees and businesses from the traditional pay cycle.
A win-win innovation
EWA possesses the ability to increase employee morale and productivity. It builds a trustworthy environment at the workplace. Employees who believe they have control over their finances are less likely to be anxious about their finances, are more motivated to come to work, and are significantly more productive.
In a global economy, we must look beyond industrial-era conventions and assembly-line methods that have little relevance to how business – and life – is done today. We must broaden the scope of financial wellness beyond insurance and social security benefits. It is a pastime for modern firms to include Earned Wage Access as part of their employee value proposition. EWA is a game-changing approach to payroll improvement, a terrific opportunity to be future-ready, and a versatile solution to promote employee retention and lifestyles in the post-pandemic period.
(The author is Mr. Akbar Khan, CEO, Rain and the views expressed in this article are his own)
