Despite earning a stable monthly salary, low-income workers often struggle to stretch their pay across the month. Financial constraints force many to rely on informal credit sources such as family, friends, or moneylenders, which diminishes their ability to save and cope with unexpected income shocks. This often perpetuates a cycle of debt.

Our research indicates that among low-income workers, women tend to be disproportionately affected by financial stress, spending as much as 50% of their income on repaying loans. Therefore, we tested whether access to earned wages during times of need, through a flexible, employer-supported, interest-free program, could have significant implications for the financial security and wellbeing of women workers.

Can access to earned wages during times of need alleviate the debt burden for women workers? What impact could this have on worker turnover and productivity for firms?

To explore this, we implemented a 6-month randomized controlled trial involving 834 women workers in select garment factories.

• Treatment group: 426 workers were offered access to their earned wages before payday via an employer-supported Earned wage access (EWA) tool at zero interest.
• Control group: 408 workers were not provided access to the tool.

Workers in the treatment group used an Android-based application installed on tablets placed on the factory floor, enabling them to withdraw wages directly into their bank accounts with just a few clicks. To ensure ease of use, we provided interactive training sessions and stationed support staff near the tablets for assistance.

The study revealed significant benefits for both workers and firms just thirteen months after the app’s launch.

• Reduced borrowing: Informal borrowing decreased by 30% in the treatment group.
• Improved financial security: Workers in the study group were 20% less likely to forgo essential expenses and 32% less likely to report difficulty managing between paychecks.
• Enhanced productivity: Workers with access to the EWA tool were 8% more productive than their counterparts in the control group.
• Lower turnover: The turnover rate in the treatment group was 24% lower than in the control group.
  

Watch this video to know how a flexible, employer-supported, interest-free tool can have far-reaching implications for women workers’ financial security and wellbeing while also improving business performance.