14 CARE HOME PROFESSIONAL | August 2019ASK THE EXPERT PETER BRIFFETT, WAGESTREAMmillions of businesses without senior
management even knowing.
Sadly in-work poverty is a brutal
and self-perpetuating cycle. In order
to attempt to escape it, low income
earners are forced into high cost
forms of credit, which only serves to
compound the problem. Payday loans
are a case in point. At the time of
writing in late June, based on figures
from the Financial Conduct Authority,
Brits have collectively paid roughly
£426m in interest on payday loans.
It’s a staggering amount and proof
that while Wonga may be no more and
the level of interest capped, the payday
loans industry is still thriving and
continues to prey on the lowest earners
in society — and is impacting businesses
such as yours materially as a result.
While the government is attempting
to reduce the punitive interest rates
these predatory lenders charge, the real
issue is the inflexibility of the monthly
pay cycle and the cash flow issue this
causes the majority of UK workers.
Fortunately there is a solution, a way
for firms to help their staff out of the
relentless debt cycle, and it’s called
income streaming.
Income streaming, which is already a
mature market in the US, is the process
whereby employees are allowed to
access a percentage of their earned
income — typically 30%–40% — at
any time, usually for a small flat fee
(we charge £1.75 per withdrawal, for
example). Crucially it is not a loan and
no interest is charged. Its purpose is to
help employees avoid having to resort to
the types of high cost finance that cause
serious stress — and impact not just
their personal but their working lives.
The results so far are impressive.
Companies using income streaming
have seen a 10% retention increase
and a 20% productivity increase. With
staff retention a major issue for the
care sector, these kinds of statistics
are particularly powerful. And it’s
worth noting that income streaming
does not impact companies’ cash
flow, as any income advanced before
payday is provided by independent
credit lines.Peter BriffettT
he Institute for Fiscal Studies published a report in
June on in-work poverty that was fascinating and
disconcerting in equal measure. The headline figure was that
between 1994 and 2017, there was an increase of 27% in the proportion
of working people experiencing in-work poverty — with the result that
8m Brits are now in its grip.
There are all manner of reasons why this has happened, not least the
simple fact of record high employment. But critically the report goes on
to state: “A key driver of the rise has been higher housing costs for low
earning households, driven mainly by higher private and social rents.
In addition, earnings growth has been significantly slower for lower
earners relative to higher earners.”
As employers in a sector containing a significant percentage of low
earners, care home owners need to be alive to the exponential growth of
in-work poverty and the impact it is having on their staff — and therefore
their productivity and bottom lines. To be in work and at the same
time in relative poverty is a major drag on morale and will be affectingPETER BRIFFETT, CO-FOUNDER AND CEO,
WAGESTREAM, EXPLAINS HOW BY PROVIDING
INCOME STREAMING CARE HOME OWNERS CAN
HELP THEIR STAFF AVOID IN-WORK POVERTYPOVERTY TRAP
BEATING THE