Durban — It is a far too common, and all too distressing, occurrence that people run out of money before the month ends and the next salary is paid.

While the phenomenon is jocularly referred to as “too much month at the end of the money”, it is no laughing matter, particularly as it pertains to low-wage earners.

The reasons are many, but primarily, as the Pietermaritzburg Economic Justice and Dignity Group points out, the aforementioned low wages.

Add in “Black tax”, single, small, incomes taking care of extended families, and high public transport costs and it is no surprise that many bank accounts are empty well before month-end.

But people must still travel to work, and mouths must still be fed, leading many to borrow money from friends and family.

And when this fails, they turn to loan sharks.

With the prohibitively high interest rates involved, borrowers are caught in a vicious monthly cycle with little hope of escape.

Enter the “earned wage access” concept which promises to alleviate the situation, somewhat.

Allowing workers to access a portion of their salary already earned may help them take care of immediate needs in the middle of the month, but the scheme runs the risk of resulting in them having nothing left to take home at the end of the month.

With only small fees involved, it certainly sounds like a better option than loan sharks, but still carries the risk of capturing workers in a different debt cycle and should be carefully regulated.

Workers should be limited to accessing no more than 40% of their salaries and there should also be a limit on the number of times this can be done in a year.

Repeat borrowers should be targeted for financial literacy and discipline tutelage to help them manage their money better.

Until the festering sore which is our poor economy is addressed, earned wage access can act as a salve if applied correctly.

Independent on Saturday