Private firms urged to tap EWA services

April 17, 2024 | 12:00am

MANILA, Philippines — The private sector is urged to tap earned wage access (EWA) services to reduce financial stress among Filipinos who often run low in cash as they await the next paycheck.

In a briefing yesterday, Paywatch Philippines said the private sector should take an active step in making EWA available to more employees as seven in 10 Filipinos struggle in managing their finances amid debts and rising costs of commodities.

EWA allows employees to access a portion of their wages before the end of their payroll cycle, lessening the need to apply for short-term loans to cover day-to-day expenses or emergencies.

It is not a loan but is the actual money that an employee has already earned.

Paywatch Philippines president Rowell del Fierro said EWA is at its nascent stage in the country with no significant player offering such service.

“We know it’s not easy for the private sector to take on but they are already working with lending companies, they allow paluwagan, etc. All those aim to solve the same problem of employee access to money,” del Fierro said.

“But this one is just much easier and more available. And it allows employees to have better control [of their finances],” he said.

Data showed that there are close to 50 million employees in the Philippines but short-term liquidity is normally sold via credit cards which are only at around seven million holders.

This means that the majority use alternatives such as digital lending companies or informal credit through friends and families.

“This will be an employer initiative. I think this can grow really big that companies will eventually adopt especially now that it’s difficult to retain staff. It can be a powerful tool to deploy,” del Fierro said.

Four months since its entry in the Philippines, Paywatch has on boarded real estate developer Shang Properties and its malls and hotels, as well as agri-business firm Wilmar International.

Paywatch has also signed up luxury department store Rustan’s and quick service restaurant Dunkin’ Donuts. It is also in negotiations with business process outsourcing (BPO) firms and information technology (IT) companies.

For this year, Paywatch aims to on board at least 100,000 employees into the system.

“We are targeting companies that have over a thousand employees as a base and eventually, we will move down to SMEs (small and medium-sized enterprises),” Del Fierro said.

Initial data from Paywatch showed that employee usage is up to four times a month with a maximum transaction size of P3,500. About 70 percent of its users are also active.