Employers could offer financial education to help their people manage income and expenses, provide access to confidential advice, tools and resources to help employees learn how to budget or manage debt. They could also choose to offer benefits like earned wage access (EWA).
EWA provides employees with access to a portion of the wages they have already earned, in advance of their next payday. Unlike payday loans, which are a credit product with exorbitant interest rates, EWA is offered and managed by employers as a benefit.
Employees only pay a withdrawal fee made up of a small percentage of the total amount (e.g. 2%) and a flat transaction fee.
Employers incur no credit risk on EWA, as employees have already earned the money. It gives employees flexibility and control over their money and contributes positively to their overall well-being.
The amount employees can withdraw can be set as a portion of their monthly earnings (20% - 25% on average) by their employer, and they can only withdraw once they have already earned wages.
For example, someone who earns R8,000 and wants to withdraw wages halfway through the month, can only access 25% of the R4,000 they have earned so far, giving them up to R1,000 in EWA.
The R1000 is repaid with their next paycheck, which prevents employees from accumulating long-term debt. Employers can also limit how many withdrawals can be made per pay cycle, and block off periods where no EWA is available.
“EWA can save both employers and employees money,” comments Simon Ellis, co-founder and CEO of Jem HR, a WhatsApp-based employee benefits and HR platform for frontline workforces.
“It saves HR and Finance departments time spent evaluating and processing employee loan requests.
“EWA platforms integrate into payroll systems, employees opt in, receive the withdrawn amount, and repayments are deducted from their next salary, making it almost effortless for HR teams to manage,” Ellis adds. “EWA also stops employees who run short on cash from having to pay 20 - 30% interest to loan sharks.”
According to The Deskless Worker Pulse research report, conducted by Jem in 2024, 44% of deskless workers in South Africa are under financial duress. Almost half run out of money before payday every month. Of those, 97% need the money for essentials like transport, food, medical services, airtime or electricity.
“Offering EWA to employees reduces absenteeism when employees don't have money for transport for example,” states Caroline van der Merwe, chief product officer at Jem. “It also lowers employee turnover by reducing financial stress, often the reason employees leave jobs.
“Absenteeism and employee turnover cost employers in terms of wages paid, the cost to hire temporary workers or pay existing workers overtime, the cost to hire replacements, reduced productivity, and the administration costs to manage absenteeism,” van der Merwe says.
“Low wage workers are often in debt due to a lack of access to affordable credit. EWA gives them a means to break the pay-cheque-to-pay-cheque cycle and emerge on a steadier financial footing, which is good for employer and employee,” van der Merwe concludes.
