80% employees find wallets empty before payday, finds EY-Refyne study

More than 80 per cent of the white-collar workforce surveyed exhaust their salary before the month ends, with over a third of them running out of money by the middle of the month, according to a study launched jointly on Wednesday by consulting major EY and start-up Refyne to understand the preference for an emerging salary payment model called Earned Wage Access (EWA).

The ever-increasing cost of living, spending triggered by a fear-of-missing-out (FOMO) lifestyle, poor financial planning and vicious debt cycles are increasingly making it difficult for employees to sustain cash flow during the month with their salaries, noted the ‘Earned Wage Access in India: The final frontier of employee wellbeing’ report.

The study, based on responses from 3,010 salaried employees in India aged 20-60 years in July-August 2021, found that 14 per cent exhausted their salary early in the month, 20 per cent by mid-month and 47 per cent by end of the month.

Making a case for EWA, the study highlighted that only 38 per cent feel happy and in control of their financial well-being. Financial stress is not just restricted to the low-income groups because 59 per cent of the respondents who earn more than Rs 100,000 per month confirmed falling short of money to cover expenses with their salaries, it said.

Further, the IT services industry, which is also one of the biggest job providers in India, has the highest proportion of respondents who are not able to cover their expenses with their monthly salary. And millennial employees expressed the most interest to avail the payment model as 77 per cent said they want to explore it, it said.

Under the EWA model, employees can request to withdraw salary earned at any point during the payment cycle before pay day through a mobile or web app. Firms like UKG India and Refyne are testing out in India the model which western countries have adopted, despite several organisations there paying employees every fortnight.
 
The study pointed out that FMCG, manufacturing, infrastructure, construction, real estate, retail, restaurants, logistics, and tourism and transportation have had significant EWA adoption in India, while banking, finance, insurance, IT and telecommunications have also experimented with EWA programs.

EWA providers usually integrate their service into the company’s Human Resources Management System (HRMS) and charge both employees and employers for their services. The method to allow employees access cash instantly is being pegged as a low-cost way to attract new talent, improve retention and generate goodwill in the workforce.

 “When you get paid in a fixed cycle, you force your expenses to match the payment cycle,” Refyne CEO and co-founder Chitresh Sharma told Business Today. But you can avoid exploitative lending products, if you are offered flexibility of payments, he added.  

Within our user base, most people earning less than Rs 50,000 a month use the service monthly, whereas those in the Rs 50,000-Rs 1 lakh bracket lean more towards using it once in three months, said Sharma. “Even some CEOs opt for it once in six months.”

The Bengaluru-based start-up’s clientele includes Cars24, Cafe Coffee Day, Practo, Rebel Foods, Hira Group, Wow! Momos. The firm has a user base of 7 lakh employees, which it plans to grow up to 10 lakh by the next quarter, and 30 lakh in the next 18-24 months.

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