Salary advance, the startup that replicates the US model in Italy: how Ewa-Corriere.it works

The world of work changed forever. After the pandemic, not only is remote working an essential need for people and companies, but in general we are looking for an optimal work-life balance, pleasant and welcoming places and stimulating tasks. What is also destined to change the salary aspect, because the monthly rate – typical of our country and unchanged for a century – no longer fits the context. A context in which the prices of goods are growing rapidly (inflation in April reached 8.2%) and wages are decreasing (from 1990 to 2020, the average annual wage decreased by 2.9%, while in Germany it grew by 33.7% and in France 31.1%). Numbers that explain why workers often run out of salary before the third week and why in the face of sudden expenses it is easy to run into situations of over-indebtedness or insolvency.

The startup and early access to salary

A possible solution comes from fintech: it’s called Ewa which stands for “earned wage access”. To replicate it in our country Salarify, an Italian-Hungarian company founded by Bence Radk and Paolo Petrolini in 2019, which boasts international companies among its customers, including Sap, Men at Work and Abacus. In the USA, an option offered to many workers – typically blue collar workers of large multinationals (such as Walmart and McDonald’s) with wages that are normally biweekly: in practice it consists of possibility to access, in advance of the established payday, a part of the salary accrued. A daily payday that has beneficial – and measurable – effects on the financial stress of the worker and therefore on his well-being and productivity, but also on loyalty to the company.

The landing in Italy

The arrival of our offer in a labor market such as the Italian one will be able to offer companies and workers benefits that other markets have already experienced – says Paolo Petrolini, co-founder and COO of Salarify – simple and immediate access to salary already earned, but not yet paid, and the reduction of financial stress that allows employees to avoid situations of over-indebtedness. On the business side, we also found that it can improve the automation of payment management processes and support organizational well-being and agility. But if these are general benefits applicable to any market, the EWA is an interesting product for how the Italian labor market works structurally. A plastered market, characterized by low productivity and therefore by stable or declining wages which, with the dizzying increase in prices, translate into an increase in the working poor: today there are 8.2 million Italians at risk of poverty, of which 6.5 million are underpaid workers (data from the Unimpresa study centre).

The young working poor

Among the working poor are the blue collars, but also Gen Z who is now approaching the world of work and therefore registering low entry salaries and often precarious contracts. In our country, Salarify is aimed at all companies, of any size and product sector. Today the service is particularly widespread among active ones in the logistics, manufacturing, automotive and tourism sectors. There are already many financial institutions in Italy and in Europe that have expressed interest in integrating the Salarify service into their digital platforms.

How Earned wage access works (and the American lesson)

Salarify’s offer aimed at companies: these are the ones that will provide their employees with the Ewa as a financial benefit, thanks to the integration of the service into the payroll management platform. Employees will then be able to access the Salarify Pay app, register with their tax code, select the employer and the amount to withdraw and in a few clicks access their salary at any time. This is not an advance or a loan, but literally flexible and personalized access to your earned income: an opportunity that works as a safety net in case of sudden expenses but also as a digital wallet and as a financial planning tool. In the USA, where the Ewa was introduced in 2012 by the PayActiv platform, over 25 million people access the service regularly, typically workers of large companies (among others Walmart and McDonald’s) with salaries paid every 2 weeks. But in the US context, where 40% of workers are unable to face a sudden expense of 400 dollars, according to Gartner, by 2023, 20% of US Big Corporations will offer EWA solutions (currently they are 5%) . On this side of the Atlantic, the situation of workers is not much different. This is explained by a report by Jp Morgan, according to which 45% of Europeans see expenses increasing at a faster rate than income and 43% believe that this is negatively influencing their lifestyle. To deal with inflation, 33% of these will use the savings accumulated in the pandemic, 25% will take out a loan. Therefore the Ewa could find fertile ground.

The advantages

There are many reasons for using EWA (Everest Group report, 2022). an alternative solution to debt to raise liquidity, creating a greater alignment between payments and recurring or on demand expenses. In addition, EWA, used in conjunction with financial literacy tools, improves management and control of finances why use the income produced up to that point (without resorting to loans and consequent interest) promotes greater awareness of one’s cash flows. But not only. The service generates an improvement in productivity because it reduces the stress associated with financial problems, which can disturb concentration and cause absenteeism. Knowing that you can access your salary in times of need for unexpected expenses can make all the difference. These benefits for the employee also spill over to the employer: EWA can also be viewed as a high-value benefit by employees, making them more inclined to work for companies that offer this flexibility: industry studies measure a 35% lower turnover % for companies using the Ewa. According to a report by Visa, 95% of workers say they are more motivated to work in companies able to offer this service. A particularly important issue in a post-pandemic world where the lack of talent, following the phenomenon of “Great resignations”, represents a real challenge.