'As the financial landscape evolves, so must the benefits we provide'
Earned wage access (EWA) may be the solution to Canadians’ financial struggles, according to a recent report.
Currently, 42% of Canadian workers experience significant financial stress multiple times a day or daily, reports ZayZoon. And 66% say this stress impacts their work performance.
But over eight in 10 (81%) employees are enthusiastic about employers prioritizing their financial wellness.
And 61% of respondents say that access to EWA would improve their overall financial well-being and reduce financial stress, reports ZayZoon.
"As the financial landscape evolves, so must the benefits we provide,” says Darcy Tuer, Co-Founder and CEO of ZayZoon.
What are the advantages of EWA for employers?
This will also be beneficial to employers, according to the report based on two ZayZoon surveys: one of 3,250 employees and the other of 5,000 employers and 500 HR professionals.
Employees who use ZayZoon’s EWA report a 74% improvement in financial stress and 78% increase in motivation to perform at work.
Overall, employers using EWA report:
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- a 29% reduction in turnover
- an eight-hour-per-month reduction in absenteeism
- twice as many job applicants compared to those who don't.
A previous ADP research also found 96% of employers offering EWA find that their employees like it. That same study finds 96% saying it helps with talent attraction, and 93% saying it helps with employee retention, noted Workable.
However, there are possible drawbacks to on-demand pay, notes Workable.
“It may lead to impulsive spending on the part of employees if they lack financial literacy or discipline. While this falls more on the employee than it does on you as an employer, it’s worth thinking about.
“Also, some on-demand pay services charge extra fees, which can add up over time.
“And finally, in contrast to the above-listed benefit of reduced administrative work. An on-demand pay model built into an existing payroll system can lead to numerous technical and logistical headaches, at least in the short term.”
In 2022, the median family after-tax income of Canadians was $60,800, up by 2.5% from 2021, before adjusting for inflation. However, when adjusted for an annual rate of inflation of 6.8%, the 2022 median family after-tax income was 4.0% lower than in 2021, according to Statistics Canada (StatCan).