EWA scheme plays roles unlocking financial freedom

Shabnam Nida Wazed

With increasing global inflation rates, particularly impacting low-wage workers, the traditional practice of waiting for scheduled paydays is becoming increasingly challenging. To address this issue, some entities are now offering Earned Wage Access (EWA) programs, which provide employees with the option to access a portion of their earned wages mid-pay or any other time of a month. As a result, EWA is gaining popularity for its ability to offer workers a more flexible pay structure and enhanced financial stability.

In Bangladesh perspective it is also becoming an issue as low paid workers can’t save or do not have surplus money in the middle or later of a month due to higher expenditures in the growing inflationary pressures.

According to Bangladesh Bureau of Statistics overall inflation in September registered at 9.63 percent. Meanwhile food inflation was 12.37 per cent and non-food at 7.82 per cent which means low earning workers are spending higher in purchasing foods. This financial stress causes them to seek a second job and such pressure slows down their performance and productivity.

At a cash money shortfall for the rest of the days of a month the workers or employees either need higher paid jobs to meet the shortfall or are needed for facilities like access to earned wages or scopes for borrowing money.

When options are unavailable it is an unwell being situation that workers can’t cope with daily needs. So to meet various demands many borrow money from relatives or from others. Sometimes lending sources are not available.

On the other hand many factory owners on fixed pay days lack adequate funds to pay workers’ salaries and due to this insufficiency workers need to wait for extra days for getting salaries. Such may happen due to slow down of business. According to Export Promotion Bureau data Bangladesh earned $4.31 billion in merchandise exports in September which is the second lowest this year though it grew by 10.37 per cent on a year-on-year basis. Earlier in April, the export earnings fell to the lowest at $3.96 billion. Due to such slow exports, few factory owners sometimes can’t pay wages at scheduled pay day.

It indicates factory owners facing new challenges that they fail to pay wages timely. In such a situation banks can come forward to mitigate this temporary problem as they do have sufficient money and can come into collaboration that banks will provide facilities to workers as early wage access (EWA) to them which should be termed as loan with minimum charges through devising a system and during payday the banks will automatically cut the lending amount from workers wage once the employers deposit money to payroll accounts.

It shows the ways termed as early access to earned wages, instant pay, earned- income and on- demand pay are the ability for employees to access their already earned net wages before their designated payday.

Giving workers access to their wages means an employee who finishes a certain working day can draw their wages by using a mobile app which is installed on a certain platform. Using EWA, an employee’s money is readily available to cover a much-needed bill or an unexpected expense. The simplest way to set up EWA at workers mobile or with organization is to integrate an earned wage access app with workers current payroll provider. The app lets them make necessary payroll deductions before automatically sending wages to workers’ accounts.

Employees use a chosen wage access provider’s app to request their earned wages before their regular payday. They can choose to receive all or part of the wages they have worked. However, most apps charge a minimum withdrawal fee.

They then choose to have their wages transferred directly to their mobile app supported bank account. The app deposits the employee’s remaining wages on their regular payday. For example an employee earns Tk20,000 in a month. He or she requests and receives Tk10,000 early. The employee gets the remaining Tk10,000 at the end of the pay period.

The workers’ demands for early access to earned wages are growing since the post covid-19 economy and tight labor market. Inflation caused by different factors including higher petroleum prices and regional conflict are creative troubles to low earning people. Amid such problems it is becoming a growing demand for getting access to earned wages. And many employers across the world are adopting new technology based payment systems that empower workers in financial inclusions.

It is also setting a new trend of competition among employers in offering facilities to workers in the era of high inflation. This is to financially benefit the workers. Introducing such benefits can boost employees’ confidence and loyalty to owners; it also improves retention for younger employees significantly. Once an employee has on-demand access to wages, they’re less likely to leave job and seek higher paid ones.

EWA helps relieve employees’ financial stress. When an employee is confident in his/her finances, will be more engaged and productive at work and less likely to be in stress and it gives employees greater control over their money to cover general bills, groceries, and other financial needs. It can also improve their overall financial well-being.

Having EWA, an employee feels confident and in unexpected personal emergencies, like a medical crisis, one feels comfort and can navigate their emergency. EWA can provide peace of mind and lessens stress during a crisis.

Introducing such facilities can make a difference among employers and workers. All employers may not provide EWA but the employers who offer will get workers.

There will be a new trend as a precondition of giving EWA facilities to workers and there will be a competition among employers. This will enhance digital financial inclusions among workers.

To make it accessible to workers, the banks themselves may offer the owners about the EWA systems, or employers may offer to banks for providing such services to their workers.

The writer is Chief Executive Officer and founder of Agam International Limited

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