17  Exercises

17.1 A case study: Flexible pay

Most employees are paid in arrears. They accrue pay while they work, which is paid on a regular cyclical basis after its accrual.

For example, suppose you are paid fortnightly, with your next pay on Thursday August 27. On that day, you are paid for your labour since the last payday on 13 August; that is, you are paid for your labour from August 13 to August 26.

Some fintechs and financial services providers are developing technology that integrates into employer payroll systems to enable employees to see what they have earned at any point during their pay period and access a proportion of that accrued income in advance of their payday. This enables them to smooth their consumption and meet any unexpected expenses, a major source of financial stress.

Consider this offering from the perspective of what we have discussed in this subject to date. How might employees use the service? How might it affect savings and consumption? Why?