Human Resources, Employee Benefits, GCC, Trends
Unlocking Financial Benefits: The Dual Advantage of Salary Advances for Employees and Employers Improving Financial Security and Workplace Satisfaction.
3 Oct 2023
Salary Advances, also called earned wage access (EWA) is a financial benefit that allows employees to access their earned wages before payday. This can be a valuable benefit for employees who are struggling to make ends meet or who have unexpected expenses.
EWA has two main advantages:
Financial flexibility for the employee: EWA gives employees the flexibility to access their money when they need it, without having to wait until payday. This can help employees to cover unexpected expenses, such as car repairs or medical bills. It can also help employees to budget for large purchases, such as a new car or a down payment on a house.
Reduced turnover for the employer: EWA can help to reduce employee turnover by making employees feel more valued and appreciated. This is especially important in industries with high turnover rates, such as the hospitality and retail industries.
A study by the Society for Human Resource Management found that employees who have access to EWA are more likely to be satisfied with their jobs and less likely to leave their jobs. The study also found that EWA can lead to a reduction in employee turnover of up to 20%.
Here are some additional benefits of EWA for employees:
Reduced debt: EWA can help employees to reduce debt by giving them the ability to pay off bills on time. This can improve their credit score and make it easier for them to borrow money in the future.
Improved savings: EWA can help employees to save money by giving them the ability to set aside money from each paycheck. This can help them to reach their financial goals, such as saving for retirement or a down payment on a house.
Increased financial security: EWA can give employees peace of mind knowing that they have access to their money when they need it. This can help reduce stress and anxiety, and can lead to improved overall health and well-being.
Avoid High-Cost Borrowing: Instead of resorting to high-cost borrowing options like payday loans or credit card cash advances, employees can access their own earned wages without incurring additional debt or interest charges.
Improved job satisfaction: EWA can improve job satisfaction by reducing financial stress. When employees know that they have access to their money when they need it, they are less likely to worry about money and more likely to be happy and productive at work.
Here are some additional benefits for the employers:
Improved productivity: EWA can help to improve employee productivity by reducing stress and anxiety. When employees are not worried about money, they are more likely to be focused and productive at work.
Attraction and Retention of Top Talent: In today's competitive job market, attracting and retaining skilled employees is a top priority. Offering early wage access sets an employer apart as an organisation that understands and supports its workforce's financial needs. It becomes a valuable tool for recruitment, showcasing a commitment to employee well-being. Additionally, this benefit can contribute to improved employee retention rates, as employees are more likely to stay with an employer that provides financial flexibility and cares about their financial security.
Enhanced Employee Engagement and Satisfaction: Offering early wage access demonstrates that an employer cares about its employees' financial well-being. When employees have the option to access their earned wages before the traditional payday, it reduces financial stress and enhances their overall job satisfaction. This improved satisfaction translates into higher levels of employee engagement and a more positive workplace culture.
Increased profits: EWA can lead to increased profits by reducing recruitment and training costs and improving employee productivity.
Salary advance is a valuable financial benefit that can offer dual advantages to both employees and employers. By providing employees with access to their earned wages when they need it, EWA can help to reduce financial stress, improve job satisfaction, and increase retention rates.