The ILO intensifies its efforts to accelerate the transition from cash to digital wage payments

The International Labour Organization (ILO) will work towards the establishment of a Global Centre on Digital Wages for Decent Work to enhance sustainable enterprises, promote respect of workers’ rights and broaden financial inclusion.

News | 17 December 2020
Over 230 million of male and female workers around the world receive their wages in cash. Cash-based wage payments are inefficient for employers and they are risky and disempowering for workers. Evidence shows that the transition from cash to digital wage payments has the potential to increase the efficiency of payroll services. A new research paper from the World Bank also found that paying workers’ wages digitally gradually leads to increased account use and greater financial capability. In the context of the COVID-19 pandemic, the digitalization of wage payments is receiving increasing attention as a way to minimize human interactions during financial transactions. However, the transition to responsible digital wage payments often comes with challenges at the levels of enterprises, workers and financial ecosystems.

To address the issue and accelerate the transition, the ILO will strengthen its work on wage digitization and will establish a Global Centre on Digital Wages for Decent Work. The initial set-up phase (2021-2023) of the Global Centre is supported by a USD 4.6 million grant from the Bill & Melinda Gates Foundation.

The Global Centre, based in the ILO’s Social Finance Programme, will promote the transition to digital wage payments through research and evidence-based advocacy. The Centre will also develop the capacity of employers and workers organizations while facilitating the development of inclusive digital payment ecosystems.

With activities at global level and in four countries in Africa, Asia and Latin America, the Global Centre will enable millions of male and female workers around the world to receive their correct wages, paid digitally into bank accounts or mobile money wallets, and make the most of them for better resilience and economic opportunities. With a specific focus on gender equality, the interventions will also enable enterprises in various economic sectors to better respect workers’ rights and formalize employment, and to become more productive and to grow.

Craig Churchill, head of the ILO’s Social Finance Programme: “The Global Centre will engage with government and regulatory bodies, employers’ and workers’ organizations, financial service providers, technical experts and like-minded organizations at national and international levels to raise the profile of digital wage payments and promote the adoption of good practices and standards to accelerate the transition.

One of the vital international partners for the Global Centre is the UN-based Better than Cash Alliance. Dr. Ruth Goodwin-Groen, the Managing Director of the Alliance: “Responsible digital payments to employees have the potential to build a better future of work, especially for women, and even more so during this pandemic. The Global Centre’s inspiring vision is that the benefits of responsible digitization for employees, employers and governments can scale to reach every country and sector. We celebrate the ILO as a valued member of the Better Than Cash Alliance and look forward to this new partnership.

The International Labour Organization is the United Nations agency for the world of work. We bring together governments, employers and workers to drive a human-centred approach to the future of work through employment creation, rights at work, social protection and social dialogue.

The ILO’s Social Finance Programme works with the financial sector to enable it to contribute to the ILO’s Decent Work Agenda. In this context, we engage with banks, microfinance institutions, credit unions, insurers, investors and others to test new financial products, approaches and processes.

The Better Than Cash Alliance is a United Nations-based partnership of governments, companies and international organizations that accelerates the transition from cash to digital payments to help achieve the Sustainable Development Goals.