The new study by the Joseph Rowntree Foundation and Save the Children released today found that almost nine in ten (86%) of parents on those benefits have faced extra household costs due to the pandemic, while almost half (46%) reported a reduction in income since March, as reported by the Press Association. Due to extra household costs 60 per cent of families on Universal Credit said they have been forced to borrow money, including using overdrafts, credit cards or payday loans.
This comes the same month as the Resolution Foundation’s report (A new settlement for the low paid: Beyond the minimum wage to dignity and respect) which showed the negative financial impact that inflexible wage cycles have on workers. This report touched on many factors around the human impact of financial stresses affecting workers’ lives, mental health, and working productivity. Wellbeing programmes that cover flexible pay are beginning to form a critical pillar in any employer’s response to the challenges affecting workers, at this current moment in time, as well as in changing how the UK comes out of the significant recession expected to be declared this summer.
Hastee, the earnings on demand benefits provider, argues that an innovation in business operations for enhancing wellbeing are not complex projects for SMEs – or the government – to implement. In fact, flexibility in pay is crucial to support workers and improve productivity during challenging economic situations.
CEO and founder of Hastee, James Herbert, shares this comment and recommendation for UK PLC to help transform employment contracts simply and effectively:
“There is sobering food for thought in the findings and recommendations from both these charitable foundations, Joseph Rowntree, and Resolution. Whilst some of the recommendations require changes to UK policy, new norms for contract work, or changing benefit amounts, there is one element that can have an immediate impact on the wallets of all employees or claimants. Earnings on demand is the solution to address the financial insecurity of millions in the UK by offering a right to choose how regularly you are paid. Government departments can also use it to offer liquidity to their claimants as well.
“Our 2019 Workplace Wellbeing Study and customer usage data both show that when offered the flexibility to choose, employees naturally fall into a weekly pay and spend rhythm that more closely fits the way our natural hunter-gatherer’ minds process the effort and reward of work.”
Data shows more frequent pay helps employee finances and wellbeing
Hastee’s research shows a widespread reliance on high cost credit at all levels of the workforce last year. Before the pandemic caused further strain borrowing levels were at 82 per cent. Financial stress is true for people earning any amount. In fact, the most financially stressed were Londoners earning £50,000-£150,000 per year. So the amount of money earned is not necessarily an important factor on a person’s financial stress.
Hastee’s research discovered that younger workers were the most likely to be unable to make it into work because they didn’t have flexible access to their earnings. This was the case for 60 per cent of 18-24-year-olds, 52 per cent of 25-34-year-olds and 51 per cent of 35-44-year-olds, highlighting that those who have had to miss work would have benefitted from on demand access to their earned wages to help them cover travel costs then and there.
Earnings on demand – the solution to flexible pay and employee liquidity
Earnings on demand allows users to access a portion of their own earnings, the pay that they have accrued already in that pay period, in advance of pay day. Given economic pressures and the high costs of alternate methods of stretching finances – from exorbitant payday loans to daily charges on overdrafts – it’s a low-cost way to offer workers the money they are entitled to, when they need it. It doesn’t serve to increase any cycles of debt since there are no interest fees to spiral out of control. Given that society no longer relies on other antiquated systems from 60 years ago, from faxes to cheques and paper-based banking, why should monthly payroll remain unimproved?
James continued, “when users get access to their earnings on demand they become more productive, motivated, and engaged – all of which inevitably leads to general company improvements.”