What are the financial lives of low-income garment employees like? This was one of the questions driving the research Women’s World Banking conducted in India during the early part of 2013. In partnership with BSR on their HERfinance initiative, researchers from Women’s World Banking visited several factories in the New Delhi and Bangalore areas to assess the financial needs of this particular low-income population. The lessons learned from this engagement informed BSR’s financial literacy curriculum intended to educate female factory employees and help them access necessary financial products.
Why focus on low-income garment factory employees?
According to BSR, women represent between 60 and 80 percent of the global export manufacturing labor force. Access to financial services for women employed in the formal sector can give them the tools to invest more of their earnings in nutrition, health, and education—areas that women prioritize for spending—leading to social and economic improvements in their communities and countries. Addressing the financial needs of this population is becoming increasingly important as more developing economies expand into organized labor, and begin to include not only self-employed employees but also large numbers of employees of mid- to large-size manufacturers. As part of the mission to expand financial access to all low-income women, not just women micro-entrepreneurs, Women’s World Banking joined BSR as a research partner to contribute its more than thirty years of experience into research of women’s lives and tailoring products to fit their needs.
Access ≠ Inclusion
Underlying this research and related initiative is the belief that real financial inclusion does not just mean making products available to low-income women. Financial education is necessary to bridge the gap between availability and actual use of financial products and services. Only when there is both the ability to act (financial knowledge, skills, confidence, and motivation) and the opportunity to act (access to financial products and services) does financial capability truly exist. There is an incredible opportunity for financial education in the case of low-income factory employees because of the scheduled and situated nature of their work; i.e. they must be in a specific place at specific times. Given this, Rachael Meiers, BSR’s overall HERproject and HERfinance Director, says “workplace programs are some of the most effective ways to reach low-income women.”
The research paints a comprehensive picture of the financial lives and needs of low-income factory employees in North and South India. Below are some of the findings that informed the design of the HERfinance curriculum.
Men and women approach financial goals differently.
Factory employees in general are under enormous pressure to earn for and support their families; indeed their lifecycle financial needs are centered around supporting parents and siblings while they are young and providing for children as they age (see image). While both men and women factory employees have a strong commitment to family, and work to support common goals like education, marriages, and housing, the research revealed that they differ in their approach to reaching goals. When asked, men talk about wanting their money to “go higher,” to grow the pot through investments, while women talk about “stretching the money,” referring to the financial pressure of allocating money for various needs, including savings goals such as school fees, marriage costs, and housing.
Control over income is influenced by both gender and marital status.
A family’s financial pool is typically controlled by the head of household, who in this case is usually a married man. The head of household is often the only person who has a complete view of the family’s financial pool. Other household members – wives, unmarried siblings, sons and daughters hand their salaries over to the head of household, who then allocates monthly expenses from the pool. While wives are typically the savers in the family, cultural norms dictate that they save not from their full salary, but from an ‘allowance’ given back to them from their husband, which they manage as a portion of the household budget. Unmarried women and men have even less control over their income, as they turn it over to the head of their household and receive an allowance only when needed, for expenses or purchases approved by the head of household. While there are some benefits to this system, minimal exposure to the budget and money management practice leaves many young adults at risk of being unprepared for the transition to married life where the young man becomes head of household or the young woman suddenly needs to actively manage money for the family.
Employees are in transition from informal to formal financial services.
A salary account and ATM card, received through the factory, may be an employee’s (and his or her family’s) first introduction to formal finance. While she may receive her pay through an ATM, her family may still deal exclusively in informal savings mechanisms such as savings circles and hiding places in the home. Direct deposit was widely viewed as positive by the employees, but many were not sure how to make full use of their new salary account or even fully understand how it worked. Many migrant employees also face a language barrier which presents a risk: if unable to read the words on an ATM screen, some give the security guard their ATM card and PIN so the guard can withdraw for them.
Lots of opportunity for financial education.
The opportunity for HERfinance lies in supporting the employees in this large and often marginalized segment as they become integrated into the formal financial sector. Through financial education, employees can better prepare for transitions in life, such as marriage, and develop the tools and confidence to use a salary account and other relevant services such as savings accounts and remittances to help them meet their financial goals with minimal cost and risk.
At the conclusion of our research, many employees expressed great interest in financial education. There was a lot of frustration around not having access to clear and thorough information, especially when most information comes through word of mouth from the family or trusted sources in the village. After the researchers interviewed the employees, many asked, “when can we start?”
This research paints the story of a growing segment of the Indian population that is beginning a transition from informal to formal banking. We learned that gender plays a big role in an individual’s approach to money and that often, these employees are the gateway to formal financial services for the rest of their family, which adds to the potential impact of any financial education program.
These findings are just some of the insights gleaned from Women’s World Banking’s research among low-income factory employees in India. BSR has since developed the financial education curriculum based on this information for which Women’s World Banking has provided input. The curriculum has been piloted to select sites in both regions (read this consultant’s post on the inaugural training for HERfinance peer educators) and will be rolled out to more sites after lessons from the pilot phase are incorporated into the curriculum (a full report is set to be published on September 17th so stay tuned!). The plan is to scale this program up to additional markets and not only provide financial education, but also link recipients directly to financial products, thereby providing participants with not only the ability, but also the opportunity to act on their increased financial capability.
About BSR HERfinance
The HERfinance is part of the next generation of BSR’s successful HERproject, which seeks to empower women in the global economy via workplace training on essential topics. HERfinance will help bring low-income employees into the formal financial system and help them better manage their incomes by developing a financial literacy curriculum to educate factory employees in global supply chains and help them access necessary financial products.