Most of us receive our salary once a month. This has been the case usually as there is a cost attached to the payment of salaries, whether in the form of cheques or GIRO transactions. And not to mention, paying a fixed salary every month makes it easier for companies to manage their cash flow. However, when flexibilities for payments, banking and purchases are fast becoming the norm, why should salary payment be any different?
A paper written by Ernst & Young in 2020 says that at any given point in time, there is approximately US$1 trillion of payroll accrued in employers’ treasuries across OECD countries before it is paid to employees. This liquidity could be better used to enable employees to take control of their finances and improve their financial wellbeing by aligning more closely with their income and expenses.
It is my opinion that with technological advances and cheaper payment methods, we can now better assist employees with increased salary flexibilities while maintaining the company’s cash flow needs.
Financial wellbeing in Singapore
Before I jump into the solution, let me first talk about the problem.
It is a common sentiment that Singaporeans are financially secure. However, there is an increasing number of research that shows this might not be the case, which has now been further exacerbated by the Covid-19 pandemic.
A financial wellbeing survey conducted by OCBC in 2020 showed that 53% of Singaporeans polled indicated that they would be unable to defray a sudden expense; 11% indicated that they have borrowed money from either family members or friends, and 27% admitted to only paying the minimum sum on their credit cards.
Add to that, a Financial Wellbeing Index by DBS in 2020 showed Singaporeans only scored 46 out of 100 points compared to the regional average of 56 points.
It is my opinion that due to the big disparity between growth in standard of living vs growth in salaries, Singaporeans are in jeopardy of becoming financially unstable. As such Singaporeans are in need of financial solutions that are sustainable and non-predatory in nature.
The Solution: Earned Wage Access (EWA)
Earned Wage Access is the ability for employees to access wages that they have earned but not yet received. It is not a loan and therefore does not have any form of interest rates or late fees. Just a flat transaction fee that is borne by the employee, if he or she decides to use the service.
This simple concept has already been used across the globe by both big and small companies alike. This has, in turn, helped millions of employees improve their financial wellbeing, especially through the Covid-19 pandemic.
How can EWA benefit your business?
Financial stress is the number one workplace concern amongst employees and will affect the company’s bottom line.
You may be asking ‘How do I know if my company has a financial wellbeing problem?’ The symptoms of poor financial workplace wellbeing come in many forms. Some common examples are requests for salary advances; workplace borrowing amongst employees; workplace theft; and workplace harassment by money lenders.
Engaging an employee benefit like Earned Wage Access not only relieves these symptoms but works toward improving financial wellbeing in the workplace.
Looking at the shifts in technology and how people have the ability to get anything almost instantaneously, an employee’s wage shouldn’t be any different. Speak with us and we’ll be more than happy to share with you how this employee benefit can benefit you as an employer too. To find out more, visit www.getpaid.asia and request a demo to enjoy an obligation-free 30 days trial.
The future of pay is now.
Original post first published in hrctech.sg on 1 April 2021.