A Complete Guide to Earned Wage Access

Earned wage access (EWA), also popularly known as salary on demand, is a financial wellness products that gives employees the ability to draw on their accrued wages before pay day.

In Pakistan, most salaried employees are generally paid once a month (except those working on a daily wage model) and with a population of more than 200 million (FY 2021), Pakistan is the fifth most populous country in the world. 

According to a survey conducted by the Pakistan Bureau of Statistics in August-October FY2021, the population employed was estimated to be 52.56 million. It shows that around 25% of the population in Pakistan is employed and earning wages/salary. 

According to this graph, 50% of the population falls under the low-middle groups with an average salary of less than equal to 76,900 PKR/month. They live paycheck to paycheck, leaving no room for unexpected expenses, which more often than not, come up. This sobering truth is quite unsettling. 

Salary on demand, also known as Earned Wage Access, is bypassing the outdated bi-weekly or monthly payroll cycles by allowing salaried employees access to their earned wages whenever they need them instead of waiting for payday. There are numerous benefits of Earned Wage Access, but what exactly is it and how can it benefit your business and your employees?

How Does It Work?

Earned Wage Access allows salaried individuals access to money that they have earned anytime, anywhere! This instant access saves them from over drafting on credit cards and falling into debt traps, or souring relationships with friends/family by taking loans from them. By offering EWA, employers can safeguard their employees financial as well as mental wellbeing. 

You can also get your company onboard with ABHI and provide your employees with earned wage access.

It’s SIMPLE! All you have to do is:

• Your company signs up with ABHI.
• Your employees’ user accounts get created on the ABHI mobile application.
• Your employees are allowed to access their earned salaries anytime during the month.
• Your company deducts the borrowed amount from the employees’ monthly salary and returns it to ABHI.

Here are the advantages of Earned Wage Access for employers and employees; 

Advantages of EWA for Employees

• Safe from Debt Traps

If your employees have no savings/emergency fund and are living paycheck to paycheck, they become extremely vulnerable to debt traps. This level of susceptibility is a dangerous place to be in. Falling into credit card debt or taking out a payday loan are common practices for people in such circumstances. EWA can help prevent that.

• Financial Security 

Knowing that they can access their own earned salary if and when needed, creates a sense of financial security in employees, boosting their confidence and self-esteem, enabling them to give their 100% at work. EWA offers new beginnings for those who have been struggling. It can be a solid financial foundation that allows them to build a future for themselves instead of grappling with debts and expenses. 

Advantages of EWA for Employers

Workers who are not valued lose motivation and focus on the job, as well as respect for their employers. And that is not a good place to be in, since employees are the lifeblood of your business. If they don’t feel appreciated, how long do you think your company will stay afloat?

Acknowledging this simple fact by supporting your workers is extremely important. And implementing a financial wellness program such as EWA is one of the best ways of showing support. 

Here are a few ways Earned Wage Access can benefit your business:

• Increased Productivity

Earned Wage Access can make employees feel that you genuinely care about their financial wellbeing. As a result of this, they will be more inclined to work harder and do better everyday. A happy employee is a productive employee.

• Positive Environment at Work

When employees are financially stressed, that frustration accumulates and sometimes spills over in interactions with colleagues and clients both. By implementing an EWA solution, you will ease a lot of the financial stress on your employees. Feeling secure in the fact that they have access to a portion of their income if they need it will relax their minds. This makes for a better, more cheerful, and positive work environment. 

• Loyalty to the Company

When employees feel they are cared for by their employers, it increases their loyalty to the company. And a stronger sense of devotion results in greater levels of output. 

• Higher Retention Levels

With the job market becoming increasingly oversaturated, it’s quite difficult to find and retain good employees, who are not just hard workers, but also a good cultural fit for your business. Implementing a financial wellness program like EWA solves this problem. 

Click here to learn more about the Earned Wage Access in Pakistan 2022 by Ernst & Young