Why Earned Wage Access is Becoming the Norm
Financial wellness in the workplace is the new frontier for employee benefits. A growing number of employers in the UK are adopting Earned Wage Access (EWA) programmes, a trend that’s reshaping how employees manage their money.
But why is Earned Wage Access becoming the norm? To answer that, we’ll explore the history of Earned Wage Access, its benefits for both employees and employers, and its growing momentum in the UK and beyond.
A Brief History of Earned Wage Access
Earned Wage Access isn’t an entirely new concept. Its roots lie in innovations designed to address financial challenges that many employees face. Traditionally, workers’ wages were locked until payday, forcing them to bridge financial gaps with high-interest payday loans, credit card debt, or overdrafts.
The rising awareness of the "payday gap" sparked demand for a better solution. Pioneered in the US, Earned Wage Access services offered employees the ability to access a portion of their earned wages before their scheduled payday.
This solution reached the UK in the late 2010s. By 2022, the Financial Conduct Authority (FCA) had acknowledged the value of Earned Wage Access programmes in promoting financial health, further propelling their adoption. Today, Earned Wage Access has become a standard for forward-thinking employers aiming to support their workforce.
The Benefits of Earned Wage Access
Why exactly has Earned Wage Access become so popular? The answer lies in the mutual advantages it offers employees and employers alike.
Benefits for Employees
1. Reduced Financial Stress
For many workers, the gap between paydays can feel like an eternity and cause financial stress. Earned Wage Access allows employees to withdraw a portion of their accrued wages when they need it most, avoiding reliance on high-interest alternatives. Whether it’s paying unexpected bills or covering daily expenses, employees gain a lifeline they can rely on.
2. Improved Mental Wellbeing
Financial worries significantly impact mental health, leading to anxiety, decreased focus, and ultimately, reduced workplace productivity. Earned Wage Access empowers workers by giving them a sense of control over their finances, which can improve mental wellbeing and foster greater job satisfaction.
3. Better Money Management
Earned Wage Access solutions often come bundled with financial education tools. Providers like Level not only provide access to wages but also offer budgeting and savings tools. This enables employees to develop healthier spending habits for the longer term while addressing immediate needs.
Benefits for Employers
1. Employee Retention
High turnover rates cost businesses. Considering the cost of recruitment, onboarding, and training, retaining skilled employees is far more efficient. Offering Earned Wage Access as a benefit makes companies more attractive to current and potential employees, improving long-term retention. It can help reduce staff turnover by up to 50%.
2. Fill More Shifts
Employees are much more likely to take on overtime shifts if the reward for their hard work is available immediately after. Earned Wage Access can reduce unfilled shifts by up to 62%. In sectors such as care, this increased incentive for overtime can help reduce agency costs.
3. Attracting Talent in a Competitive Market
Attracting top-quality talent requires standing out from other employers. By implementing Earned Wage Access programmes, companies show their commitment to modern benefits that address employees’ real-world challenges. Job seekers increasingly prioritise employers who care for their financial wellbeing.
Why Earned Wage Access is Here for the Long Haul
The speed at which Earned Wage Access is becoming the norm reflects broader changes in work culture and how we think about financial health. 15% of all UK employers now offer Earned Wage Access, and in industries such as hospitality, retail and care, this percentage is much closer to a third.
Why Now is the Time to Adopt Earned Wage Access
If your organisation hasn’t yet implemented Earned Wage Access, the time to act is now. With rising employee demands for personalised benefits and the proven success of Earned Wage Access in improving employee satisfaction, introducing an Earned Wage Access solution can help your business stay competitive and forward-thinking.
Partner with a trusted Earned Wage Access provider to make the transition seamless and impactful. Your employees, and your bottom line, will thank you.