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Why the Global Centre on Digital Wages for Decent Work?
Despite the fast digitization of payments in recent years, the use of digital wage payments is still unevenly distributed. Millions of low-income women and men workers around the world still receive their wages in cash. Many others may be paid digitally but may cash out their full wages around payday and do not fully benefit from digital wages.
The digital payment of wages, into bank accounts, mobile money wallets or prepaid cards, presents opportunities to strengthen sustainable business practices, encourage respect of labour rights, empower workers, and broaden their financial inclusion.
However the transition to responsible digital wage payments often comes with challenges for enterprises, workers, the financial sector and regulators.
The Global Centre on Digital Wages for Decent Work addresses the challenges of cash wages and promotes the transition to responsible digital wage payments for the benefits of workers, employers and governments in every country and economic sector. The Global Centre is a one-stop-shop for promoting evidence-based strategies and interventions, highlighting progress and sharing knowledge and tools for the transition to responsible digital wage payments.
How do we define wages?
The term wages means remuneration or earnings, however designated or calculated, payable directly or indirectly, whether in money or in kind, by the employer to the worker and arising out of the worker’s employment.
What are digital wage payments?
Digital wage payments, sometimes called electronic wage payments, refer to the payment of wages on individual bank accounts (direct deposit), mobile money wallets or prepaid cards. In the context of wage payments, prepaid cards may also be known as payroll cards.
What are responsible digital wage payments?
Responsible digital wage payments are digital wage payments that respect the applicable national laws and regulations, internationally recognized human rights, including the fundamental principles and rights at work, and relevant international labour standards. They also respect relevant principles, guidelines, and good practices, notably concerning (digital) financial inclusion and (financial) consumer protection. The UN Principles for Responsible Digital Payments, developed by our partner the Better Than Cash Alliance and that provide guidance on how to design, offer, and promote adoption of responsible digital payments are applicable to digital wage payments.
Responsible digital wage payments contribute to progress toward the ILO's Decent Work Agenda and the Sustainable Development Goals.
For enterprises, digital wage payments can improve efficiency and transparency of payroll services, enhance productivity, advance conditions of work, and facilitate access to services and markets through improved compliance with national legislations.
For workers, digital wage payments can - when provided responsibly - increase their control over their wages. The change can also improve their access to other formal financial services such as payments, saving, credit and insurance, for greater economic opportunities and resilience.
For Governments, digital wage payments can increase the transparency of wage payments, facilitate the monitoring and identification of wage payment irregularities, and inform the design of incentives for greater compliance.
The transition to responsible digital wage payments often comes with challenges for enterprises, workers, the financial sector and regulators.
Enterprises may lack the know-how to find the right digital wage payment solutions and negotiate the fees with financial services providers, they may lack time and resources to transition or they may face resistance from the workers.
Workers, in particular women workers, may lack access to digital technology and have limited digital and financial literacy.
The laws or regulations may not ease the formalization of employment and compliance or may not facilitate the development of inclusive digital financial services, including the opening of digital accounts.
Finally, the financial infrastructure, in terms of network of bank branches, ATMs, mobile money providers, cash-in/cash-out points, merchants’ acceptance for digital payments and availability of recourse mechanisms may not always be in the right state for workers and enterprises.
We promote the transition to responsible digital wage payments at the macro, meso and micro levels. This includes building conducive regulatory environments and inclusive digital payment ecosystems, developing capacities of employers and workers’ organizations, working with employers to convert to digital wage payments and improving workers’ financial and digital literacy.
We document the progress on wage digitization in countries, for example by identifying good practices and assessing the impact of digital wages on workers’ empowerment and financial inclusion. We also document the impact on productivity and competitiveness of enterprises, the formalization of employment and respect for labour rights. The Global Centre develops and updates technical and policy guidance tools and organizes learning events, such as webinars and meetings. The result is a knowledge platform of evidence, tools and guidance that continues to grow and evolve through our virtual community of practice.
We raise the profile of digital wage payments among governments, employers’ and workers’ organizations, as well as experts, financial service providers, global supply chain key actors and development agencies to accelerate the transition.