Having a bank account is one thing; knowing how to use it effectively may be another story. For garment-factory workers and other global supply-chain employees who are increasingly paid through digital direct-deposits, transacting with a bank for the first time can be intimidating. Factory managers may find digital payroll systems more cost-effective, but they rarely devote the time to show employees how to use their new bank accounts, or even how to withdraw their salaries from the ATM. Now, thanks to the results of a peer-education model developed by BSR’s HERfinance initiative in collaboration with Women’s World Banking, the workplace has tremendous potential for building financial capability among employees—particularly the enormous, often-overlooked, segment of low-income salaried workers. If the model is implemented on a wider scale, supply-chain workers in developing countries stand to gain not just more access to formal financial services but also the knowledge and confidence they need to make the best use of their new accounts, and manage their money more successfully.
In a new report, Financial Inclusion in the Supply Chain: An Evaluation of the HERfinance Pilot in India, BSR shows how its new workplace-based peer-education program has had a measurable impact on employees’ financial capability. BSR launched the HERfinance pilot in India in October 2012 with funding from a Walt Disney Company grant, and with qualitative research and expert curriculum review from Women’s World Banking. The pilot focused on 11 garment factories employing a total of roughly 10,000 people in the Bangalore and Delhi areas, and was based partly on the positive results of HERproject, BSR’s ongoing workplace-based program in health education.
What the research revealed about garment workers
To support the HERfinance curriculum development, Women’s World Banking conducted in-depth qualitative research in participating factories in early 2013, assessing garment workers’ financial needs, behaviors, and levels of financial capability. The research revealed many areas of opportunity for improving supply-chain workers’ financial lives. For instance, women in general reported that they handed their salaries to their husbands or the head of household, and many said they needed help using an ATM machine. Some admitted that to withdraw their direct-deposited paychecks—which many did immediately, not realizing they could save money in their bank accounts—they gave their ATM card and pin number to their husbands or risked asking a bank security guard.
The research also revealed a great opportunity to impact not only the factory workers, but also their families and communities: Many of the research participants were the first people in their families to have a bank account. If their transition from informal to formal financial services turned out to be a positive experience, they could then teach others about the benefits of using a bank account.
Based on the initial findings, BSR developed a peer-education curriculum to implement in workplace settings. Women’s World Banking provided expert review of the proposed curriculum and attended the early training modules. Working with local NGOs in Bangalore and Delhi, and with multinational buyers who have relationships with factory suppliers, BSR reached out to factory management to secure buy-in for the program. Approximately 5% of employees at each factory were then chosen to act as peer trainers. BSR and its local partners worked with this selected group on basic financial concepts and coached them in how to train their colleagues—in budgeting, saving, financial planning, responsible borrowing, discussing finances with family, and using local financial services—through scheduled educational sessions at work as well as informally, in casual conversations.
After the eight-month program, participants showed significantly higher levels of financial capability. Women were 39% less likely to report needing help using an ATM. They were also 23% more likely to say that they decided how to allocate their salaries, and 44% more likely to report saving some of their income for personal needs. They had a better grasp of bank terminology, and were four times as likely to understand the meaning of “interest” as money paid as well as earned. A vast majority, 91%, said they had shared what they’d learned with others, underscoring the value of workplace-based peer education as a model with a potentially far-reaching impact.
In the post-training surveys, women also showed more involvement in financial planning and saving. They were twice as likely to report discussing household spending decisions with family members, and three times as likely to say they were confident they could meet their family’s financial needs over the next two years. Both women and men employees were 38% more likely to save some of their salary in a bank account, and 90% were saving a bigger portion. Since the women surveyed were more likely than men to spend most of their earnings on health, nutrition, and education for their families (90% compared to 30-40% for men), their improved saving and spending patterns stand to have a strong ripple effect.
What made the peer-education sessions so effective? One reason is that salaried employees like the ones participating in the pilot spend six days a week together, so they can keep discussing what they’ve learned even after the program ends. They’re more comfortable getting financial advice from each other than from management or an outsider, and more likely to relate to each other’s experiences and act on lessons learned.
While these results show that workplace-based peer education is a model that works, in order to make it sustainable in the long-term, factory management will need to see the benefit to their own business. One result that should help: 97% of participants said their perceptions of their employers had changed for the better after the pilot.
The next priorities for this program are increasing sector buy-in and expanding this program to a wider population. For instance, Women’s World Banking, together with BSR, gathered banks, microfinance institutions, researchers and NGOs in Mumbai this past May to share the findings from our work, engage in a dialogue with key stakeholders and most importantly, identify solutions to accelerating financial access for this market.
India’s garment industry employs 35 million workers, mostly women, so the potential within this sector alone is huge. Agricultural workers and factory employees in other industries represent an enormous segment too, both in India and throughout Asia and Africa. Reaching them through workplace-based training programs can mean transformative results not just for supply-chain workers, employers, and financial institutions, but for the economic well-being of the entire region.