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Why on-demand pay is an increasingly popular employee benefit

Instead of dipping into their overdraft or maxing out their credit cards, many employees are asking their employers for an advance on their salary in the form of on-demand pay. This immediate access to their wages helps employees solve their poor cash flow problem and alleviate any financial pressures in a sustainable, worry-free manner. So much so that on-demand pay is an increasingly popular employee benefit, and one that this Pacific Prime article will explore. 

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The rise of financial worries amidst the COVID-19 pandemic 

Whether it’s economic uncertainty and recessions across the globe or lockdowns forcing businesses to shut down, mass layoffs (and certainly the threat of layoffs) have been a defining feature of the past year and a half. Many employees were already worrying about money prior to the COVID-19 pandemic. But the pandemic has caused this figure to shoot up through the roof. 

According to a survey by the Pew Research Center in the U.S., about half of non-retired adults say the economic impact of the pandemic will make it harder for them to achieve their long-term financial goals. What’s more, 44% of these individuals think it will take them three years or more to get back to where they were a year ago and about 10% don’t think their finances will ever recover.

It’s also no surprise that certain segments of the population are harder hit than others. Lower-income adults, adults younger than 30, and ethnic minority groups are most likely to have someone in their household lose a job or take a pay cut since the outbreak took the world by storm in February 2020. In fact, lower-income and Black adults are also particularly likely to say they’ve taken on debt or put off paying their bills to cover lost wages or salary. 

The effect of financial worries in the workplace 

So what happens when your employees are victims of financial stress? The answer is simple – they bring the stress with them into work. This lowers their motivation and productivity level, and has spillover effects on their physical health as well. The bottom line is that it increases presenteeism and absenteeism in the workplace, the cost of which can be monumental for companies and employees alike. 

Our Global Employee Benefits Trends Report 2020 looked at a case study from across the pond in the U.K. and found that more than 500,000 private sector workers took time off in the last year (2019) due to financial woes, leading to a loss of over 4.2 million days of work. Similarly, financial stressors were the main reason that 2.4 million employees reported a decline in productivity over the last three years (2018 to 2020).

Further reading: Our Global Employee Benefits Trends Report 2021 looks further into the change in view of health from one-dimensional to multidimensional, encompassing the full spectrum of physical, mental, and financial health. 

On-demand pay is a financial wellbeing benefit 

Given the increase in financial stress and the effect it has on the workplace, many employers are looking to increase their employees’ financial wellbeing. Some financial wellbeing benefits include financial counseling, online tools/digital platforms, and on-demand pay. While the former two provide longer-term skills to help employees come out of the cycle of debt, on-demand pay provides greater flexibility to those who are currently living paycheck to paycheck. 

According to a survey by Ceridian, an HR software provider, people of all levels want quicker access to their pay. The results of the survey show that more than 75% of employees said they would be more loyal to an employer if they were offered free and immediate access to their salary. In addition to this, the benefit also results in a 34% reduction in absenteeism, a 40% reduction in turnover, and an 86% increase in job performance. 

For all things employee benefits, contact Pacific Prime today!

As a global health insurance brokerage and employee benefits specialist, Pacific Prime has over two decades of experience helping employers of all sizes and industries design,  implement, manage, and optimize employee benefits plans. Whether it’s to increase the financial wellbeing of your employees or any other organizational goal, we utilize a tailored and technology-driven approach to make sure you choose the right plan to meet your goals. 

To learn more about what we offer and what we can do for you, arrange a FREE consultation with our corporate team today!

Senior Content Creator at Pacific Prime
Suphanida is a Senior Content Creator at Pacific Prime, an award-winning global health insurance and employee benefits specialist.

With over 5 years of experience in the field, Suphanida spends the majority of her day synthesizing complex pieces of insurance-related information and translating this into easy-to-understand, engaging, and effective content across a variety of media such as articles, infographics, whitepapers, videos, and more.

Suphanida is also responsible for planning and publishing three whitepapers released annually by Pacific Prime: The State of Health Insurance Report, The Cost of Health Insurance Report, and The Global Employee Benefits Trends Report. Additionally, she handles the LinkedIn profiles of Pacific Prime’s Founder and CEO, as well as Global HR Lead.

Suphanida’s strengths lie in her strong research and analytical skills, which she has gained from her BA in Politics from the University of Warwick and Erasmus Mundus Joint MA in Journalism from Aarhus University and City, University of London.

Being of Thai-Indian origin and having lived, studied, and worked in Thailand, the UK, and Denmark, Suphanida also has a unique, multicultural perspective that helps her understand the struggles of expats and globetrotters.

Outside of work, she enjoys traveling to new places and immersing herself in different cultures.
Suphanida Thakral