By Alex Kim, Co-Founder and President at Paywatch
When you think of employee wellness, what initially comes to mind? Perhaps some physical wellbeing programmes, or various benefits that target emotional health and social activities. Since the onset of the Covid-19 pandemic, we would probably all identify mental health as a key priority, too – but what about financial health?
While many businesses tend to separate employee finances under a compensation and benefits bucket, an individual’s income – and their access to financial stability – is arguably one of the most important aspects of employee wellbeing. This is especially true across low income earners, who make up close to 30 percent of Malaysia’s workforce, as they are among the communities hit the hardest by financial instability caused by unforeseen disasters. The pandemic and the recent floods, for example, have resulted in skyrocketing rates of depression among Malaysia’s lower income employees.
Employee wellness is affected by many things, but stress caused by financial burdens ranks as one of the highest factors impacting mental health. This has a knock-on effect, leading to high turnover and absenteeism, which directly affects productivity and retention rates. This puts even more pressure on businesses to minimise operational disruptions, while the affected employees swing from job to job, always one unexpected bill away from a financial crisis.
While a simple answer here is to simply pay low-wage earners more, we know that such sweeping changes are unlikely to happen quickly. In the meantime, employers can take charge of a specific action that allows them to better address employee wellness needs – and it all comes down to payday.
Allowing employees to take charge of their salaries
A whopping 88% of Malaysian employees have borrowed money from their employers or informal sources to cover unexpected expenses. Due to the nature of low-income work, many of these employees remain underbanked – meaning they have no access to traditional financial aids – and so, when a rainy day comes, they have no other choice but to borrow cash. This often puts people in dangerous positions, worsening their debt and stress.
Interestingly, when asked what employers can do for them to help, 71% would prefer the ability to draw down salary as and when they need it, over a higher salary. This seems like a reasonable request, don’t you think? Why shouldn’t an employee be able to withdraw money they have already earned in a case of emergency, instead of waiting for payday?
By re-thinking payday and using flexible payout dates, businesses across Malaysia can directly help employees relieve their financial burdens, with zero added risk. The money withdrawn by the employee is not an advance salary – but simply an early payout for money already earned.
Earned Wage Access is the systemic change we need
While payout based on hours worked can sound like a nightmare for every finance department, it doesn’t have to be this way. Earned Wage Access (EWA) solutions can relieve the burden of the employer, allowing them to track hours worked and enable the employee to withdraw up to 50% of their monthly earnings – without any disruption to the company’s HR or finance systems. Solutions like Paywatch ensure this by partnering with major banks, who will cash out to the employee first and then be reinstated by the employers on salary day. This process allows the employee to withdraw earned wages with standard ATM fees to help cover any unexpected expenses, and bridge the cash flow issues they may face between paydays.
An added bonus, employers can also help employees get connected to banks and start building credit scores that can enable them access to greater financial opportunities in the future, fulfilling their organisational responsibility to care for their workforce from a financial perspective.
Just because something has always been done one way, doesn’t mean it can’t be changed. Payday is ripe for disruption, and the future of work is changing rapidly. We saw it with the acceptance of remote working, and we are starting to see it with salaries and flexible payroll systems to create real, meaningful change for everyday Malaysians.
This is what employee wellness means to us – reducing stress caused by financial concerns by making a systemic change to the way workers can manage their salaries. In return, businesses can expect a more dedicated, productive, and loyal workforce, which ultimately creates a better financial future for all.
