Earned Wage Access: A financial product for the well-being of Indian employees

By: |
November 17, 2021 1:03 PM

Earned Wage Access is a financial product that enables employees to access a portion of their earned salary at any time before their payday.

Earned Wage Access, early salary, wages, employer, income, payThe report gives a ringside view of the state of financial well-being of Indian employees.

The financial well-being of Indian employees has often been discussed but rarely researched. A recently launched report titled “Earned Wage Access in India: The final frontier of employee wellbeing” gives a ringside view of the state of financial well-being of Indian employees. The report has been launched by Refyne, India’s first and largest Earned Wage Access (EWA) solution provider, in partnership with Ernst & Young.

What is Earned Wage Access (EWA)

EWA is a financial product that enables employees to access a portion of their earned salary at any time before their payday, with the remainder being paid at the end of the pay period without disrupting the payroll. This helps them to better align their income and expenses, and reduce their need for high-interest credit schemes. Unlike salary-based lending or payday loans, EWA does not involve borrowing on the part of the employee. It usually carries a nominal cost for them and no cost for the employer

Some key findings

  • Around 81% of Indian employees have faced a financial shortfall between pay periods.
  • Nearly 72% of Indian employees have resorted to alternate finance options as a result of worsening financial strain due to their inability to access liquid cash during emergencies and to cover unplanned expenses.
  • About 81% of those who have experienced financial difficulties have reported mental distress, health problems and lower morale.
  • Employers have observed that up to 20% of employee turnover can be attributed to financial stress. When this stress is carried into the work environment, it manifests as distraction, absenteeism, reduced performance and ultimately employee turnover.
  • Our research points to three main causes of financial shortfalls for salaried employees, which ultimately translate into diminished financial well-being: medical emergencies, home- and family-related expenses, and loan repayments.
  • About 42% of Indian employees expect their employers to assist them in securing their financial well-being

The report analyses employee & employer preferences towards EWA and explores the state of workforce’s financial wellbeing, surveying 3,010 employees across India.

EWA frees up employees as well as employers from the traditional pay cycle. This model makes earned salary available to employees in real time, giving them instant access to ready liquidity at any time of the month. Employees become eligible to withdraw a part or whole of their earned but unpaid salary before the payday at a nominal transaction fee, without disrupting the organization’s payroll process.

Speaking on the launch of the survey, Chitresh Sharma, CEO and Co-Founder, Refyne said, “The need for a better quality of life, evolving mindset and impact of the Covid-19 pandemic is creating a fundamental shift in the way employees think about and manage their finances. Our latest report ‘Earned Wage Access in India: The final frontier of employee wellbeing’ further iterates the unique economic situation that Indian employees are finding themselves in. For instance, of the employees surveyed, only 38% feel happy and in control of their financial wellbeing, while 59% of respondents who earn more than Rs 100,000 per month confirmed falling short of money to cover their expenses with their salary.”

“Employers have a critical role to encourage responsible and disciplined financial behaviour among employees. We believe that EWA can serve as a medium for employees’ financial empowerment and nurture overall financial wellbeing in the long run”, he added.

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