A new financial wellness platform aims to help Bangladesh’s cash-strapped garment workers unlock earned but unpaid wages whenever they want.
Founded in Indonesia in 2020, Wagely revealed Wednesday its move into the world’s second-largest clothing exporter, where it will launch a program for more than 50,000 workers across some of the country’s largest apparel manufacturers, including Classic Composite, SQ Group and Youth Group. This “strategic expansion,” Wagely said, comes two months after it raised $5.6 million in a round of funding led by New York’s Integra Partners.
Wagely revolves around the concept of earned wage access, also known as instant or on-demand pay. Instead of drawing a salary on a scheduled pay date, workers can tap into their earnings in real time. Wagely says that nixing the typical month-long wait in favor of immediate payments eases the pressure on insolvent workers to borrow money to cover basic needs. Financial struggles, made more acute by the coronavirus crisis, loom large among low-income workers in Asia, it noted. Many who grapple with insufficient savings turn to predatory moneylenders when unexpected expenses arise. If they’re unable to repay their loans in time, mounting fees can trap them in a cycle of debt.
“While Indonesia continues to be our priority in light of the country’s large blue-collar workforce that is in urgent need of fair financial services, Bangladesh represents a sizable opportunity with over 4.5 million workers in the ready-made garment industry alone,” Tobias Fischer, CEO of Wagely, said in a statement. “Bangladesh’s workers have been severely impacted by the ongoing Covid-19 pandemic resulting in increased financial stress with major impact to manufacturers. We’re encouraged by the very strong demand by some of the largest ready-made garment manufacturers to partner with us during this initial launch phase and look forward to more employers adopting the future of salary payments.”
Providing workers with increased visibility into their wages can motivate them and help them make more responsible financial decisions, Fischer said. It also offers a gateway to greater overall financial wellbeing.
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“Offering workers real-time access to their salary and financial education is only the first step toward building financial wellness,” he added. “We are on the path toward building a holistic financial wellness platform with the underlying effort to offer workers access to affordable services, that encourage financial responsibility and provide a path toward financial stability and inclusion.”
Earned wage access can benefit employers, too, by increasing worker productivity, mitigating turnover costs and increasing business savings, Wagely said. Its customizable plug-and-play platform also means suppliers don’t have to alter existing processes, it added.
“Thanks to the rapid advancements in technology, people today can access almost anything instantaneously; worker wages shouldn’t be different,” said Warisul Abid, chief people officer at SQ Group, whose 18,000 workers produce activewear, knitwear, lingerie and textiles. “We are thrilled to partner with Wagely and allow our 18,000 employees real-time access to their salary. With Wagely, our employees can now track and access their earned salary anytime between the traditional monthly pay cycle including evenings, weekends and public holidays. Even only a few days after launch, we already witnessed the positive impact of Wagely’s solution on worker productivity and motivation.”
What Wagely doesn’t do is address the issue of persistently low wages, which is endemic not only to Bangladesh but to the garment manufacturing supply chain at large. In a 2020 survey of 108 brands by the Clean Clothes Campaign, the garment industry’s largest consortium of trade unions and labor nonprofits, 93 percent of respondents failed to provide evidence they are paying a living wage to any of their suppliers.
“For decades, brands and retailers have built their profits on low prices. The global oversupply of clothing generated by fast fashion gives brands the power to push their suppliers to agree to produce clothing and footwear for the lowest prices possible,” the organization wrote on its Fashion Checker website, which tracks the progress—or lack thereof—of living wages in the industry. “The price brands pay their suppliers is supposed to be enough to cover factory running costs, buy material for production, ship the products, pay for labor and leave a profit margin for the factory. Worker’s wages are the easiest cost to cut.”
Labor advocates have long pointed to poverty wages, exacerbated by exploitative brand purchasing practices, as the main reason most garment workers barely scrape by. Despite the often-booming bottom lines of the brands they make clothing for, the majority of workers are unable to afford “life’s basic necessities,” the Clean Clothes Campaign said. Together with the Asia Floor Wage Alliance and the Worker-Driven Social Responsibility Network, the group has urged brands to sign a legally binding agreement that requires them to pay an additional “living wage contribution” on each order they place.
“It’s about time that a credible proposal is made in which brands are truly held accountable for the dreadful circumstances under which workers and their families have been living for decades while they, the brands, were making gigantic profits,” Anannya Bhattacharjee, president of the Garment and Allied Workers Union, said when the proposal was made in January. “Brands’ [corporate social responsibility] reports are full of promises regarding wages. Now it’s time for them to put their money where their mouth is.”