Wealth inequality in Australia has grown enormously over the last two decades. Although we are a relatively well off country, it’s startling to observe the difference in wealth across the spectrum. Over this period, the average wealth of the top 20% has grown ten times faster than the bottom 20%. Furthermore, the highest 20% have incomes nearly six times the income of the lowest 20%. This widening statistical gap is a proxy for the pace at which employers and their employees are drifting apart from one another.
Many employers are therefore largely out of touch with the daily challenges of their workers, such as paying bills, budgeting and managing their finances. These differences may make it more challenging to design employee benefits packages that address the issues casual employees face. Fortunately, times are changing, and technology is allowing for new and innovative methods to cost-effectively address the financial health of all Australians.
The drivers of financial wellbeing in low-income Australians
Access to equitable financial services
Australians who are already well-off generally have access to better deals on financial services. That may be lower-rate mortgages, more comprehensive insurance policies or more rewarding credit cards, to name just a few. Lower-income employees are often charged higher fees just to have an account or service or are more likely to use higher-interest options, such as consumer loans and incur high fees. Australian households pay an average of $468 in bank fees every year – for high-income families, that’s not much; for low-income singles, that’s a lot!
The ability to save money
Reports from ME Bank found that 25% of Australian households had less than $1,000 in liquid savings, with other surveys finding a similar proportion having no savings at all. This is not a small number of people – a quarter of the population has no autonomy to deal with even minor emergencies on their own terms. A lack of savings means that unexpected costs can only be met with debt – this is not good for anyone’s financial health.
Perhaps more important than being able to save at the end of the month is the ability to meet expenses when they fall due throughout the month. If you don’t have the cash flow available to meet your bills and expenses, debt and interest become a staple – further reducing your ability to meet your expenses in coming months. Being paid fortnightly or once a month doesn’t help – people have expenses every single day, so making the money match the expenses when its only received periodically, can be challenging.
Earned wage access (EWA) is a solution
Earned wage access providers – such as Paytime – integrate seamlessly with an employer’s payroll system to account for earned wages in real-time accurately and make the funds available to employees ‘on-demand’ as and when they need it. At the end of each workday, an employee can access the Paytime convenient mobile app to see how their earned wages are accruing in real-time. They may then choose to draw down some of their earned wages for a small fixed fee, for less than the cost of a cup of coffee. And if they dont need it, then they simply dont access it and it costs nothing – its like a safety net for those rainy days. Remember, this is money you (the employee) has already earned – it is not a loan!
Employers have all the tools at their disposal to improve the financial health of their employees. If your company wants to empower your employees by providing earned wage access, contact Paytime today to arrange a free consultation.