In the face of mass inflation, employers need to do more to help struggling employees
Employees are no longer just demanding flexible work arrangements, they're also requesting for flexible pay access. However, a new report found that only a "handful" of employers are prepared to address this request. HRD previously reported that 60% of workers want immediate access to their wages the day after rendering services. It comes amid financial challenges brought about by inflation and the cost-of-living crisis.
A new report from the Everest Group further substantiates this emerging desire in the post-COVID era, adding that financial concerns and a desire for a "consumerized" experience are driving employees to request “instant pay”. And, in the face of the Great Resignation and an intensely tight labour market, financial perks such as this one are luring in some much-needed talent.
Read more: Majority of workers want immediate access to earned wages
The report identified five key drivers of this global demand;
- Generational shift in the workforce. Gen Z workers coming into the workforce want flexibility and security, particularly financial security, according to the report.
- The need for a modern pay experience. Younger workers who grew up with quick transactions may have similar expectations of fast and flexible payments from their employers, the report said.
- New workforce models. With contingent workers, gig workers, and freelance consultants growing in the workforce, the report said more frequent pay than bi-weekly or monthly cycles may be more appropriate to adopt.
- Financial flexibility. Instant wage access is more demanded amid unexpected expenses and other personal financial commitments.
- Sense of fairness. Employees believe they deserve access to wages they already earned so far.
Paul Bartlett, CEO of payroll solutions provider CloudPay, said the shift for more flexible payroll solutions has been sped up because of the post-COVID landscape, where agile working options and cost-of-living concerns have become common.
Read more: Financial stress: Why HR should help employees manage their money
"It's clear from Everest Group's report that we're only on the cusp of the adoption of Earned Wage Access and with a breadth of market drivers continuing to influence the market globally, this demand will only increase," said Bartlett.
The CEO, however, pointed out a "reluctance" amongst employers given how the current payroll processes work. According to the Everest Group report, only a "handful" of employers are offering Earned Wage Access solutions, and fewer organisations are offering it on a global scale.
Bartlett warned that this reluctance could drive away top talent, given that 57% of the Everest Group's survey said financial wellbeing programmes have a direct impact on their employee experience.
"As the war for talent rages on, businesses need to ensure they are giving their people what they need, and to offer parity across a global workforce. According to this latest insight from Everest Group, people want more control over when and how they access their pay. Those who don't provide this will lose out on top talent," said the CEO.
Read more: Four fifths of employees say inflation is affecting their careers
Meanwhile, Instant Financial CEO Tal Clark also previously called on employers to consider immediate access to wages while they reassess their current offered benefits.
"With responsible on-demand pay, employers have the opportunity to give all employees more control over their financial wellness, and simultaneously reduce the pressure on payroll professionals caused by increased turnover and new hires," said Clark.