Financial Stability Among Daily Wage Workers

Financial stability is defined in terms of its ability to facilitate and enhance economic processes, manage risks, and absorb shocks. Moreover, financial stability is considered a continuum: changeable over time and consistent with multiple combinations of the constituent elements of finance. It is also about resilience of financial systems to stress. In other words, financial stability is that situation in which an individual is able to have savings, that is, when income exceeds expenditure. Among daily wage workers, it is highly difficult to achieve financial stability or even enter that situation because the salaries that they receive are either too low or their families are too big. As a result, the worker ends up living from paycheck to paycheck without any savings.

A concept was devised by the Elite of the society called ‘Utility of Poverty’. It stated that the poor remain poor because of the choices they make and cannot be anything else than poor. It was seen as a fact that the poor are essential for the functioning of the economy. Thus, it was believed that if the poor are not paid at all and are left hungry, then that motivates them to work more. In the words of Partick Colquhoun (1806), “Poverty is a most necessary and indispensable ingredient in society, without which nations and communities could not exist in a state of civilization. It is the lot of man – it is the source of wealth.” Past advocates of this ideology saw little to no hope for poverty reduction through mass education or economic growth. As experiments were conducted to test this hypothesis, it was found that if the poor were paid before work began, as opposed to after the work, production would tend to increase. There was no doubt that such policies were created by the Elite so that they could maintain their luxuries, authority and status as the dominant power. Many saw poverty as stemming from the failures of market institutions and believed that it was a consequence of capitalism. Similar to the classical economists, Karl Marx was skeptical of the prospects of poverty-reducing growth under capitalism, but not because of the moral failings of poor people; rather he believed that full-employment would be impossible, and the ‘reserve army’ of the unemployed would hold back any wage gains.

Ensuring or achieving financial stability can be difficult but its importance far outweighs it. For starters, managing finances effectively allows one to have savings, which can then act as an emergency fund for medical care or for unforeseen situations. It also acts as a way to cater to the delicate mental conditions and overall well being of the individual who would have undergone tremendous stress in order to survive financially. According to a survey conducted by ET Wealth, only three out of 10 people completely trust their partners on money matters. Nearly 26% of the respondents also said their partner was secretive about financial matters, which led to arguments over money. But it was still at fourth place among the biggest reasons for financial discord in households. Topping the list were overspending or being too frugal, followed by financial support to relatives and friends.

During our collaboration with Zenith NGO (a legal organization that helps migrant workers and labourers), there were many migrant labourers who had lost employment due to the pandemic and had no way to earn. With this loss in livelihood, even survival was becoming difficult for them. A lot of the migrant workers complained about unemployment and how they only wanted enough money to sleep on a full stomach. Another example of unstable finances was found when I interacted with my domestic helpers. Most of them were women and did not have a healthy relationship with their husbands. The men were addicted to alcohol or tobacco, while the women worked everyday in different houses to earn money for the family. Unless they would secretly hide some of the money away from their husbands, it would all end up being wasted for purchasing alcohol or tobacco.

Essentially it was found that several people were, and even now, are unable to differentiate between needs and wants. The basic difference between the two can be understood as: Needs are an absolute requirement for survival, for example, sufficient amount of clothing, food, shelter etc. On the other hand, Wants are something that an individual desires but may or may not require. It is not necessary for them to fulfil their desire, for example, consumption of alcohol, tobacco, gambling etc. This line between the two often gets blurred and results in wasteful expenditure. Among many others, an uncommon reason found is domestic violence as well, as stated above.

These inabilities and differences have only increased the gap between the rich and the poor, straining their financial situation even more. Through our interactions, BTS has also come to identify this as a major concern among the blue collared employees. Therefore, with a new shift in focus, we aim to lay emphasis on the importance of budgeting and savings to help reduce financial problems.

(Feel free to contact us for any collaborations or volunteering opportunities under this theme)