Wellbeing Briefing
State of Financial Wellbeing: Cost of Living Report

The cost of living crisis in the UK is having a profound effect on the workforce, influencing daily lives, mental health, and overall quality of life. A recent report on this issue sheds light on the growing financial strain colleagues face, its implications for their wellbeing, and the roles employers can play in addressing these challenges.

Understanding the Impact of Rising Costs

The report reveals that rising costs are increasing daily money worries among employees, with many struggling to make ends meet. This financial stress is leading to significant repercussions for their mental health and financial wellbeing, driving down overall productivity and engagement. Employees are dipping into their savings to cover essential expenses, which disproportionately damages their sense of financial security. Alarmingly, these financial pressures are resulting in a lower quality of life, exacerbating mental health challenges across the workforce.

Money Stigma Remains a Barrier

One of the most pressing issues unearthed in the report is the money stigma that prevents employees from seeking help or even discussing their financial hardships. This cultural obstacle suppresses awareness and delays the implementation of impactful solutions. Removing this stigma is a critical step for organisations aiming to improve financial wellbeing and foster a supportive environment.

Employers Acknowledge the Problem—With Mixed Results

Employers are increasingly recognising the scale of the cost of living challenge, but their approaches to tackling financial stress have yielded mixed results. Dedicated initiatives—such as enhanced employee benefits and flexible pay options—are being implemented, highlighting a desire to support colleagues. Yet, employees often remain uncertain about the specific role their employers should play in addressing these financial concerns.

The report underscores that employees want their employers to go beyond temporary fixes. Specifically, they seek a holistic approach that includes robust communication, empowerment tools, and practical resources to improve their current and future financial resilience.

Effective Strategies for Employers

The report offers actionable strategies for employers to address the impacts of the cost of living crisis effectively:

1. Relentless Communication
Employers must prioritise regular and proactive communication about financial wellbeing resources. Transparency and availability of information ensure employees are aware of the support available and encouraged to use it.

2. Destigmatise Money Conversations
Fostering a workplace culture that is open to discussions about money and financial challenges is essential. Employers can provide safe platforms for employees to seek guidance without fear of judgment.

3. Focus on Savings
Encouraging employees to build a savings buffer—both for immediate needs and long-term goals—should be at the heart of financial wellbeing initiatives. Tools and incentives, such as savings schemes and matching programmes, can incentivise better financial habits.

4. Tailored Support
Customised financial wellness programmes that cater to workforce diversity—ranging from entry-level employees to senior management—can help address unique needs and challenges.

Moving Forward With Financial Wellbeing

The ongoing cost of living crisis is undeniably reshaping the workplace, elevating the importance of financial wellbeing programmes as a central aspect of employee support. For human resources teams, these insights offer a profound opportunity to contribute meaningfully to colleague satisfaction and productivity.

Through robust communication, a focus on destigmatisation, and an emphasis on future-proof savings, organisations can empower their colleagues and maintain resilience in challenging economic times.

Feb 10, 2025|3 mins read
Wellbeing Briefing
Mind Over Money Report - Financial wellbeing & mental health insights

The Mind Over Money Report provides valuable insights into the profound connection between financial wellbeing and mental wellbeing, highlighting the implications of financial stress on colleagues; and actionable strategies for employers. This comprehensive document serves as an essential resource for senior HR professionals seeking to foster a financially resilient and mentally healthy workforce.

Key Findings

The report reveals a concerning correlation between financial stress and reduced employee mental wellbeing. Financial pressures often result in significant productivity losses, demonstrating that financial wellbeing is not simply a personal issue but one that impacts workplace performance. Notably, employees experiencing financial stress are more likely to feel disengaged, report a scarcity mindset, and struggle with long-term financial planning.

Employers have a unique opportunity to address these challenges. By implementing tools and strategies that promote financial wellbeing, organisations can improve staff engagement, productivity, and overall retention, creating a win-win solution for both the business and its people.

What is a Scarcity Mindset?

A core focus of the report is the concept of the scarcity mindset. This psychological state occurs when individuals are consumed by financial concerns, narrowing their ability to focus on other priorities or think strategically. Colleagues facing scarcity are often trapped in a cycle where immediate financial needs overshadow long-term planning, amplifying stress and reducing decision-making efficiency.

The Demographics of Scarcity

Insights into the demographics of scarcity paint a clear picture of which employee groups are most vulnerable. The report identifies patterns across income brackets, age, and job roles, providing tailored recommendations to address key concerns. For example, younger employees and those on lower incomes are disproportionately affected, leading to an amplified need for employer-supported financial wellbeing benefits. HR professionals can utilise these demographic findings to tailor their financial wellbeing programmes to meet the specific needs of their colleagues.

Can Pay Cycle Changes Alleviate a Scarcity Mindset?

One of the most innovative solutions presented is the shift towards flexible pay cycles. Traditional monthly pay cycles often contribute to financial stress as employees struggle to bridge gaps between paydays. By offering flexible pay options, such as earned wage access, employers can alleviate some of the pressures associated with cash flow scarcity. Additionally, these tools help colleagues regain control over their finances, promoting a positive shift in both their mental and financial wellbeing.

How Senior HR Professionals Can Take Action

To address the challenges uncovered in this report, this document also suggests how employers can adopt a robust financial support toolkit. This toolkit includes flexible pay options, personalised financial education, and access to budgeting tools and resources. By embedding these solutions into their benefits offering, HR professionals can make a measurable difference in the lives of their colleagues while enhancing organisational outcomes.

A Vision for Financial Resilience

The Mind Over Money Report provides a blueprint for cultivating financial resilience in the workplace. It emphasises that fostering financial wellbeing is not merely about addressing immediate needs but also empowering employees to build healthier financial habits for the future. By adopting the strategies outlined, organisations can create an environment that is not only financially supportive but also mentally enriching.

Feb 10, 2025|3 mins read
Wellbeing Briefing
Financial Wellbeing for the Hospitality Sector: Your Essential Guide

The State of Financial Wellbeing – Hospitality Outlook 2023 shares insights into supporting the financial resilience of colleagues in the hospitality sector. With the hospitality industry growing significantly over the past decade, the report underscores the importance of holistic approaches to pay and rewards, workplace saving solutions, and actionable strategies for improving employee financial wellbeing amidst the ongoing cost-of-living challenges.

Holistic Talent Approach & Financial Benefits

One of the standout themes is the urgent need for a holistic talent approach in hospitality management to attract and retain hospitality workers. It emphasises that beyond competitive pay, offering well-rounded financial benefits is instrumental in building financial resilience across the workforce. Including solutions such as workplace savings plans strengthens employees’ sense of security and reduces financial stress.

Cost of Living Challenges in the Hospitality Sector

The ongoing cost-of-living crisis has heavily impacted the hospitality sector, making financial wellbeing a top priority for HR teams. Rising costs in energy, housing, and everyday expenses significantly affect employees, necessitating actionable steps from employers.

The report highlights that organisations equipped with comprehensive financial wellbeing programmes are better positioned to support their workforce. Financial resilience is no longer an optional offering; it is an essential part of sustaining both colleague satisfaction and operational success.

Pay and Rewards Conundrum

The report points to a critical pay and rewards conundrum that is prevalent across the hospitality sector. While competitive wages remain fundamental, organisations are advised to adopt innovative models to address broader financial challenges.

Flexible pay mechanisms, such as earned wage access or on-demand pay, are cited as revolutionary tools that provide instant access to earned salary for employees. They help ease financial strains and contribute to a healthier emotional and financial state among colleagues. By integrating these options, businesses create a more sustainable workforce that feels supported in their financial wellbeing. This, in turn, enhances customer satisfaction as colleagues that are financially secure and emotionally balanced are better equipped to provide exceptional service, making each customer feel valued and special.

Practical Plan of Action for Hospitality Industry Colleagues

The study puts forward a structured plan of action that senior HR professionals can adopt to improve their colleagues’ financial outlook and enhance the overall customer experience. Key recommendations include:


Building Community and Financial Confidence through Customer Experience

By fostering a sense of community in organisations and engaging with the local culture, employees are more likely to feel valued and supported. The report suggests providing tools that not only serve financial needs but also strengthen social cohesion, team morale, and satisfaction in the workplace.

The Way Forward

The Hospitality Outlook 2023 shows that prioritising employee financial wellbeing is not just a moral responsibility but a competitive advantage. Companies that integrate inclusive financial benefits and support systems will recover faster from talent shortages, address retention issues, and build a resilient workforce ready to meet future challenges.

Supporting employees’ financial resilience goes beyond ticking boxes—it builds a pipeline for business sustainability in a rapidly changing economic and competitive landscape.

Feb 10, 2025|3 mins read
Wellbeing Briefing
State of Financial Wellbeing 2024 Report

State of Financial Wellbeing 2024 Report

Financial wellbeing is increasingly gaining attention in workplaces, with HR professionals at the forefront of driving change. This report highlights the critical areas impacting employee financial wellbeing and provides actionable insights for creating inclusive and effective financial health programmes.

Key Barriers to Financial Wellbeing

Financial Wellbeing Correlations

The research identifies strong links between workplace financial wellbeing programmes and improved employee productivity, retention, and satisfaction levels. Employers who invest in financial health and wellbeing see tangible benefits, including better mental health outcomes and enhanced workplace morale.

From Empathy to Action

While many employers empathise with the financial struggles of their workforce, a significant action gap persists. The report underscores the importance of moving beyond surface-level education to implement accessible and impactful financial benefits. Reducing the "Gatekeeper Empathy Gap" is a step toward building trust and equity.

The Action Plan for HR Professionals

The report provides a comprehensive Employer Action Plan, detailing strategies for improving employee financial wellbeing:

1. Develop an Inclusive Financial Wellbeing Toolkit:

2. Close the Educational Gap:

3. Adopt Data-Driven Practices:

4. Promote Financial Empowerment:

The Call to Action

Workplace financial wellbeing is not just a "nice-to-have" but a vital component of employee satisfaction and organisational success. By implementing the report’s recommendations, HR professionals can build a more equitable, resilient, and productive workforce.

To drive progress, this report serves as a roadmap, inspiring employers to create meaningful, sustainable financial benefits that promote employee financial resilience and wellbeing.

Feb 10, 2025|2 mins read
Wellbeing Briefing
Diversity, Equity & Inclusion in the Workplace | Wagestream

The "Essential and Excluded" report aims to shed light on the financial challenges faced by the UK’s frontline workforce, particularly ethnic minority workers, and provides actionable recommendations for employers to build inclusive workplace policies. The findings advocate for diversity, equity, and inclusion (DEI) strategies that empower employees and create financial resilience through accessible benefits and robust support systems.

Key Findings and Insights

Shaky Foundations
Frontline workers often face unstable financial conditions, leading to heightened stress and insecurity. Many are balancing precarious incomes with growing financial demands.

Missing Bills
The report identifies a pattern of missed bill payments and late fees within the workforce, largely driven by cash flow issues and unpredictable wages. This signifies a need for stability in salary structures.

Missing Out
Frontline workers are frequently unable to access existing financial opportunities, leading to reliance on less secure options. Ethnic minority workers, in particular, feel excluded from tools and credit systems that could strengthen personal finances.

The Savings Gap
A disproportionate number of essential workers lack sufficient savings, leaving them vulnerable to economic shocks. The challenge is amplified for ethnic minorities due to structural inequalities and limited access to financial resources.

Locked Out, or Locked In
Workers describe feeling "locked out" of financial essentials like credit cards or loans due to their credit profile, or "locked in" to high-interest financial products that perpetuate cycles of debt.

Mapping the UK’s Frontline Workforce
The UK’s frontline workforce forms the backbone of essential services, with women making up a significant proportion. Despite their contributions, they often experience inequitable pay, variable hours, and fewer opportunities for financial growth.

Ethnic Minority Workers Face Additional Barriers
Ethnic minority workers face systemic challenges, including:


Essential Workers, Excluded from Financial Essentials
The report highlights how financial exclusion disproportionately affects minority groups and creates broader diversity, equity, and inclusion challenges. Among these challenges are:


An Action Plan for Inclusive Employers

The whitepaper closes with practical recommendations for employers to strengthen financial inclusion and wellbeing in the workplace:


Recommendations to Empower Employers

The document provides critical guidance for integrating DEI strategies into workplace policies:

Driving Change Through Financial Inclusion

The report underscores that financial exclusion is not just a personal challenge—it is an organisational and societal issue. Employers are uniquely positioned to address this through tailored policies, inclusive benefits, and proactive efforts to promote equity. By championing financial inclusion, businesses can achieve both improved employee well-being and a stronger, more equitable workforce.

Call to Action for Employers

Employers have an unparalleled opportunity to lead the way in transforming workplace financial wellbeing. Through inclusive strategies and innovative tools, businesses can actively support their employees’ financial resilience and equity.

To explore how these strategies can be implemented in your organisation, and learn more about practical solutions, read the full Wagestream whitepaper.

Feb 10, 2025|4 mins read
Wellbeing Briefing
Social Care Report: Inclusion at the Crossroads

This exclusive report from Wagestream and Care England reveals the financial inclusion challenges faced by social care workers, and how you as an employer can step in and help. 

Read the report today and discover how...
How financial exclusion affects social care workers


Report summary

A joint effort by Care England and Wagestream, this report delves into financial inclusion in the UK’s social care sector, a vital industry, which is predominantly staffed by women and ethnic minorities. Through a survey of over 1,700 employees, the study highlights the financial challenges faced by these workers and offers actionable solutions for employers.

Key Findings

1. Volatile Work Hours: Over 30% of respondents face fluctuating hours, with ethnic minorities experiencing this instability more frequently. This unpredictability exacerbates financial insecurity.

2. Struggling to Pay Bills: Workers from ethnic minority backgrounds are significantly more likely to struggle with basic expenses.

3. Limited Access to State Support: Ethnic minority workers are up to three times less likely to access state benefits compared to their white peers.

4. Savings Depletion: Women-led and minority households often lack sufficient savings, and frequently deplete what little they have to cover living costs.

5. Dependence on High-Cost Credit: Minority workers are more likely to use expensive subprime credit products, further deepening financial exclusion.

Employer Recommendations

Innovative Approaches

The report showcases success stories like Barchester Healthcare and Home Instead, which implement flexible working, financial wellbeing platforms, and inclusive policies to support their diverse teams.

Why This Matters

By addressing financial exclusion, social care employers can foster a more resilient workforce, enhance job satisfaction, and attract talent to a sector facing significant labor shortages.

Conclusion

This action plan is a call to arms for social care employers to lead with inclusivity and financial equity, creating sustainable solutions for both their employees and the sector’s future.

Dec 4, 2024|2 mins read
Financial Wellbeing
Why financial wellbeing is so important in retail


Today, more than ever, financial wellbeing is proving to be a critical success factor for businesses, particularly in the retail sector. This is due to the ripple effects of financial stress on both individuals and organisations.

When we speak of financial wellbeing, we're talking about the ability of an individual to meet all their current and ongoing financial obligations, feel secure in their financial future, and make choices that allow them to enjoy life.

In association with the Retail Trust, we dug deep to understand the real picture of financial wellbeing in the UK, and our findings paint a startling picture. A staggering 48% of the UK population is distracted by money worries while they're at work.

Another alarming statistic is that 50% of UK households do not have enough savings to cover an unexpected bill of £300. This lack of financial preparedness makes these people vulnerable to unexpected costs, leading to more stress and financial instability.

Even more concerning is the fact that 70% of the population is described as "chronically broke." This means they are consistently strapped for cash and unable to make ends meet, leading to a persistent state of financial stress.

These are not just figures and percentages. They represent real people, possibly your employees, struggling to achieve financial stability. But, there's good news for employers who are ready to step up and make changes to enhance their employees' financial wellbeing.

Here are three key takeaways from our research:

1. Transparency is crucial: By providing clear information on expected earnings, you're helping your employees budget more effectively and take control of their finances.
2. Promote the habit of saving: Implementing savings nudges, like automatic deductions or employer match programs, can make saving feel achievable and manageable.
3. Personalised financial coaching and support: Every employee has a unique financial situation.

Offering tailored financial coaching and support can help address individual needs and drive meaningful behavioural changes.

The question is, are you ready to put these insights into action? Our report details an actionable plan for change, providing you exactly what you need to do to ensure the long-term financial wellbeing of your retail staff.

Remember, financial wellbeing isn't just about the individual. It's about the overall success of your business. Enhancing your employees' financial wellbeing leads to a more engaged workforce, improved productivity, and a better bottom line.

Jan 16, 2025|2 mins read
Financial Wellbeing Research
Flexible pay Impact Assessment: H2 2020

Key Findings


1. 62% of Wagestream users each month are not making any transfers at all, and are choosing to use the app for tracking purposes only

2. Those who choose to make Flexible pay transfers are transferring 23% of their gross salary, which equates to less than 50% of what is available for them to transfer in that period

3. Data suggests that, on average, Flexible pay transfers reduce when someone has continued access to the product. Within 12 months of making their first transfer, the average user is making fewer transfers each month, transferring a smaller percentage of their pay and is doing so at a later stage in the pay cycle than when they first started using the product.

4. More than half of transfers are spent on essential items such as groceries and bills, with this percentage increasing significantly at the start of the Covid-19 pandemic

5. A majority of users feel that Flexible pay has had a positive impact on their finances, with 77% feeling less stressed and 67% feeling more in control of their finances since downloading the app. Furthermore, 53% claim their financial situation has changed for the better as a result of using Wagestream


Preface and Methodology


This impact assessment is based on data and analysis provided by Wagestream – the UK’s largest provider of Flexible pay, also referred to as Employer Salary Advance Schemes (ESAS).

Flexible pay is the process that allows workers to receive a percentage of their pay, as they earn it, throughout the month, rather than being locked into the traditional pay cycle.

This report is based on a sample of approximately 500,000 transactions between 1st December, 2019 and 31st May, 2020. Using this data we explore how Wagestream’s Flexible pay product is used, how this has changed over time, and most importantly, what impact this has had on workers.

To answer this last point we look at how usage changes the longer an employee has access to Flexible pay, as well as how the workers themselves perceive the impact that Flexible pay has had on their lives. In summary, we see decreased Flexible pay usage over time, and strong indicators that the product is having a positive impact on its users’ finances.

Wagestream was founded with a social charter at its heart, with early charity backers including Big Society Capital, Fair by Design, Barrow Cadbury Trust and the Joseph Rowntree Foundation. Built with the guidance of these partners, every Wagestream product is designed to improve the financial wellbeing of people in work – with financial services that give, not take. We take our role as the leading Flexible pay provider seriously, and aim to help the industry analyse and share the impact of Flexible pay on workers, with transparency and regularity.

Every six months, we will publish this Impact Assessment to share the impact that Flexible pay is having on workers’ financial lives. As part of this, we welcome input from the wider industry on the impact assessment methodology and how the findings can be used to ensure Flexible pay supports the wellbeing of people in work.


Flexible pay Usage and Impact


Wagestream allows employees to track and access their wages in real time to help them budget and manage unexpected expenses.

At any one time, up to 50% of these accrued gross earnings are available to transfer through the app. The employee selects the amount that they would like to transfer to their bank account and the money is then sent using Faster Payments.

We will refer to this as an ‘Flexible pay Transfer’, and it is the use of this product that this report concerns. The Wagestream app also offers other financial tools to its users including the ability to track the shifts they’ve worked, save directly from their salary and access to financial fitness tools and impartial education.

Whilst we will not explicitly discuss these functions, a significant proportion of users do not make any Flexible pay transfers, and instead use the app exclusively for these other features.


1. How is the ‘Flexible pay’ product used?


a. How often do employees make Flexible pay transfers?

The majority of enrolled users are using the app for tracking purposes only, with 61% making no transfers in a given paycycle. 

27% of enrolled users are choosing to transfer less than once a week, allowing them to roughly replicate the cadence of weekly pay. 

A small subset of users make more frequent transfers, resulting in 7 or more transfers in a given pay period (roughly two transfers a week). 

The Wagestream app allows companies and users to set usage controls, and users receive targeted in-app notifications to remind them of the fees associated with repeat transfers.

b. How much do employees transfer?

Wagestream allows employees to transfer up to 50% of their accrued gross wages. Their available balance increases as shifts are completed, and it reduces whenever a transfer is made. 

The amount an employee chooses to transfer is governed by two things:

The amount that they wish to transfer to their bank account (e.g. to cover a specific expense or need), and

The amount they have available to transfer at that time

The second of these points is important, since the amount available to transfer decreases each time a transfer is made. Therefore those who transfer larger amounts will, by design, be unable to transfer as frequently as those who transfer smaller amounts (assuming their overall earnings are similar). This unavoidably skews the graph above to the lower amounts, and provides useful context to the 48% of transfers that are for less than £50. Overall the average transfer amount is £75. 

To remove this nuance, consider instead the total amount that an employee transfers each month as a percentage of their salary.1

Again we see that 61% of enrolled users are opting not to stream within a given month. 

Those that do choose to make a transfer are transferring 23% of their gross salary on average, which represents less than half of what they could have transferred in that pay period. 


2. Does usage increase over time?


Whilst it is insightful to look at high level metrics concerning product usage, if we are truly to understand the impact that Wagestream is having on the financial resilience of its users we need to monitor whether usage changes as an employee continues to use Wagestream from one month to the next. Crucially we want to understand if employees use the product more or less the longer they have access to it.

To do this consider distinct points in the customer journey: the month that they make their first transfer, and then regular 3 month intervals after that.2 At each of these points in time, consider how often employees make transfers, how much they are transferring, and when in the paycycle they are making these transfers. For each of these metrics we will look at how the average changes over the first 12 months of the customer journey. 

a. Do employees transfer more often over time?

In the month of their very first Flexible pay transfer, the median employee makes a total of two transfers. 12 months later the median has decreased to one transfer per month. In other words, after 12 months of using Wagestream 50% of users are now making at most one transfer per month, whereas previously they were making two. This gives some indication that monthly transfers are starting to reduce for a majority of users by the end of their first year.

b. Do employees transfer larger amounts over time?

To remove the nuances discussed earlier, we will consider the amount that an employee transfers in a given month as a % of their gross salary.3

In the month of their first Wagestream transfer, employees transfer an average of 23% of their gross salary. 12 months later this has reduced to 16% of their gross salary. 

This trend towards lower amounts over time is encouraging as it implies that employees may be improving their financial situation through access to Wagestream. This will be discussed in greater detail in the last section of this report. 

c. Do employees transfer earlier in the paycycle over time?

For each employee we look at the first transfer they make in a given pay cycle, and record how many days before payday that transfer occurred.4 This allows us to gauge whether users are accessing their salary earlier or later from one month to the next.

In month 0 users make their first transfer at an average of 11 days before payday. By the end of their first year this has reduced to 9 days before payday. This suggests that, on average employees are waiting slightly longer each month before choosing to access their earned wages. 

In summary, within a year of making their first transfer employees are, on average, transferring lower amounts, less often, and at later stages in the pay cycle than they were originally. 


3. What do employees spend their transfers on?

Following each transfer, employees are asked to pick one of eight categories to identify why they made that transfer. The results are the following:

Over half of transfers are for ‘bills’ and ‘groceries’, with ‘fun’ and ‘holidays’ making up less than 10%. 

Generally users are extremely consistent in how they characterize their transfers from one month to the next, but the start of the Covid-19 pandemic in late March 2020 saw a material increase in Groceries, and corresponding decreases in Expenses, Travel, Holidays and Fun. We will continue to monitor these changes and will provide more detail in our next report.


4. How does usage impact their personal finances?


This is the question that we at Wagestream most want to answer. We have discussed how the product is used and we have seen that this usage generally decreases over time, but what we really want to know is how, or even if, the product has impacted our users’ lives and their personal finances. 

Impact can be a difficult thing to measure, and at Wagestream we are continuously working to find improved ways to evaluate progress in this area. In this report we discuss results from recently conducted surveys where our users report on the impact Wagestream has had on their lives.

Ideally we would like to corroborate these findings with evidence-based proof that our users’ lives have indeed improved in the way that they state. In the future we hope to be able to use insights derived from our open banking portal to do just this, but we do not yet have enough data to share our findings. Please bear with us on this, and in the meantime we will discuss the perceived impact that Wagestream has had on its users.5

In this report we focus on the impact Wagestream has on it’s users’ financial resilience, using results from a survey conducted in the first half of 2020 with 1,225 respondents.6

Survey responses suggest that respondents feel overwhelmingly positive about the impact that Wagestream has had on their lives, across a range of financial resilience indicators.

77% of respondents reported feeling less stressed since using Wagestream, 53% said that their financial situation was better since using Wagestream, and 67% felt more in control of their finances since using Wagestream. Furthermore only a small subset of respondents felt that Wagestream had worsened their outlook regarding any of these indicators. 

References

1. Gross salary is estimated by taking net salary and assuming standard English income tax deductions. It is possible that this underestimates an employees gross salary in situations where there are non-standard deductions on their payslip (e.g. student loan repayments), or where the employee has more than one job.

2. These metrics exclude any employee who has enrolled less than 12 months ago to ensure that we are looking at the same set of users in month 0 as we are in month 12. For the same reason we have also excluded any employee who left their company within 12 months of their first transfer.

3. For reasons discussed previously the gross salary figures may underestimate the gross salary of some users, hence the percentages in this graph may be slightly higher than in reality.

4. If an employee does not make a transfer then they are assumed to have made their first ‘transfer’ on their payday (i.e. at 0 days until payday).

5. Survey data is collected anonymously which prevents us from drawing conclusions on how survey responses correlate with the usage patterns discussed earlier.

6. The question concerning whether users feel more or less in control of their finances was included in the survey at a later date than the other two questions. For this reason it only received 686 responses.

Click the button below to download the full Flexible pay Impact Assessment for H2 2020.

Jun 7, 2021|11 mins read
Financial Wellbeing Research
Flexible pay Impact Assessment: H1 2020

Key findings

52% of Wagestream users are not making any transfers at all in a given month, and are choosing to use the app for tracking purposes only.

Those who choose to make Flexible pay transfers are transferring 23% of their gross salary, which equates to less than 50% of what is available for them to transfer in that period.

46% of transfers are spent on essential items such as groceries and bills. Transfers for ‘fun’ and ‘holidays’ make up 12%.

Users who had previously relied on short-term, high-cost credit products reported a significant reduction in the use of these products after joining Wagestream. Of users who had previously used payday loans, 56% reported a decrease in the use of such loans due to Wagestream. Similarly, 39% of users who had previously used their overdraft reported using it less as a result of Wagestream.


Preface and Methodology


This impact assessment is based on data and analysis provided by Wagestream – the UK’s largest provider of Flexible pay, also referred to as Employer Salary Advance Schemes (ESAS).

Flexible pay is the process that allows workers to receive a percentage of their pay, as they earn it, throughout the month, rather than being locked into the traditional pay cycle. As part of a growing trend in workplace financial services, Flexible pay is designed to give workers greater control of their money and boost their financial resilience.

This report is based primarily on a sample of approximately 100,000 transactions between 1st June, 2019 and 30th November, 2019. Using this data we explore how Wagestream’s Flexible pay product is used and the impact this has had on workers.

To answer this last point we look at how the workers themselves perceive the impact that Flexible pay has had on their lives. In summary, we see strong indicators that Flexible pay is having a positive impact on the financial resilience of its users with a significant decrease in the use of short-term, high-cost credit. 

Wagestream was founded with a social charter at its heart, with early charity backers including Big Society Capital, Fair by Design, Barrow Cadbury Trust and the Joseph Rowntree Foundation.

Built with the guidance of these partners, every Wagestream product is designed to improve the financial wellbeing of people in work – with financial services that give, not take. We take our role as the leading Flexible pay provider seriously, and aim to help the industry analyse and share the impact of Flexible pay on workers, with transparency and regularity.

Every six months, we will publish this Impact Assessment to share the impact that Flexible pay is having on workers’ financial lives. As part of this, we welcome input from the wider industry on the impact assessment methodology and how the findings can be used to ensure Flexible pay supports the wellbeing of people in work.


Flexible pay Usage and Impact


Wagestream allows employees to track and access their wages in real time to help them budget and manage unexpected expenses.

At any one time, up to 50% of these accrued gross earnings are available to transfer through the app. The employee selects the amount that they would like to transfer to their bank account and the money is then sent using Faster Payments.

We will refer to this as an ‘Flexible pay Transfer’, and it is the use of this product that this report concerns. The Wagestream app also offers other financial tools to its users including the ability to track the shifts they’ve worked, save directly from their salary and access to financial fitness tools and impartial education.

Whilst we will not explicitly discuss these functions, a significant proportion of users do not make any Flexible pay transfers, and instead use the app exclusively for these other features.


1. How is the ‘Flexible pay’ product used?

a. How often do employees make Flexible pay transfers

The majority of enrolled users are using the app for tracking purposes only, with 52% making no transfers in a given paycycle. 

35% of enrolled users are choosing to transfer less than once a week, allowing them to roughly replicate the cadence of weekly pay. 

A small subset of users make more frequent transfers, resulting in 7 or more transfers in a given pay period (roughly two transfers a week). 

Please note that the Wagestream app allows companies and users to set usage controls, and users receive targeted in-app notifications to remind them of the fees associated with repeat transfers.

b. How much do employees transfer?

Wagestream allows employees to transfer up to 50% of their accrued gross wages. Their available balance increases as shifts are completed, and it reduces whenever a transfer is made. 

The amount an employee chooses to transfer is governed by two things:

The amount that they wish to transfer to their bank account (e.g. to cover a specific expense or need), and

The amount they have available to transfer at that time 

The second of these points is important, since the amount available to transfer decreases each time a transfer is made. Therefore those who transfer larger amounts will, by design, be unable to transfer as frequently as those who transfer smaller amounts (assuming their overall earnings are similar). This unavoidably skews the graph above to the lower amounts, and provides useful context to the 47% of transfers that are for £50 or less. Overall the average transfer amount is £75.

To remove this nuance, consider instead the total amount that an employee transfers each month as a percentage of their salary.1

Again we see that 52% of enrolled users are opting not to stream within a given month. 

Those that do choose to make a transfer are transferring 23% of their gross salary on average, which represents less than half of what they could have transferred in that pay period.


2. What do employees spend their transfers on?


Following each transfer, employees are asked to pick one of eight categories to identify why they made that transfer. The results are the following:

Just under half of transfers are for ‘bills’ and ‘groceries’, with ‘fun’ and ‘holidays’ making up 12%. 


3. How does usage impact their personal finances?


This is the question that we at Wagestream most want to answer. We have seen how employees use our product, but what we really want to know is how, or even if, the product has impacted their lives and their personal finances. 

In this report we look at the impact Wagestream has on the use of short-term, high-cost credit products, using results from a survey conducted between October and December 2019 with 499 respondents.

The results show a positive impact with 27% of respondents using payday loans less as a result of Wagestream, and 22% using their overdraft less as a result of Wagestream. Given a significant number of respondents had never used these products before joining Wagestream, this equates to decreasing usage for 56% and 39% of those that previously used payday loans and overdrafts respectively.

References

Gross salary is estimated by taking net salary and assuming standard English income tax deductions. It is possible that this underestimates an employees gross salary in situations where there are non-standard deductions on their payslip (e.g. student loan repayments), or where the employee has more than one job.

Click the button below to download the full Flexible pay Impact Assessment for H1 2020.

Jun 7, 2021|7 mins read

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