FinTech With a Labor Lens

At Working Capital, we are exploring how to apply a labor lens to “re-focus” FinTech tools to find solutions that mitigate the problems of labor exploitation, including forced labor. FinTech tools are democratizing financial services to a much greater extent than was possible even just a few years ago. But we can go even further by helping to sharpen, frame, and adapt tools to be delivered through channels that connect them directly with workers via workplaces. This presents an opportunity — particularly for employers/suppliers and brands — to customize and scale the delivery of the tools in a way that improve income and financial security for workers and outcomes for brands, including by reducing turnover and improving worker satisfaction.

The Fund has been evaluating areas where existing FinTech tools — some of which are already solving for reach and affordability — can be tinkered and tweaked to solve for worker vulnerability. For example, migrant workers are at significant risk for labor exploitation due to usurious recruiter fees that often saddle the workers with considerable debt. They also frequently face wage theft at the worksite, including at times without the knowledge of their employers due to illegal interventions by labor recruiters. Workers in agriculture in the US and elsewhere are often paid informally by intermediaries like farm labor contractors. All in all, greater transparency of wage payments and direct payments through digital tools can enable migrant workers to avoid vulnerability and ensure that they benefit during hiring, on-boarding, and employment.

Elsewhere, in construction, agriculture, and mining, workers relying on day wages often face severe cash flow imbalances. These can be dire enough to turn them to predatory debt, so providing these workers with accessible and affordable cash to meet their urgent needs within the work setting can help reduce employee turnover for the brands while mitigating economic vulnerability for workers. Those that do not have savings could benefit from micro insurance to manage financial shocks that can result from life events such as a medical emergency.

These are just some of the areas where we at Working Capital are looking deeper with our worker-focused lens. We look forward to continuing to explore how to refine existing FinTech tools in work-settings to create a scaled impact for the vulnerable workers and their employers in a supply chain. Please be in touch if you’d like to discuss this with us!

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