Dear Editor,
I’m a 51-year-old man, born in Guyana, and now living in the USA. Within my 51 years, I worked in Guyana for about 15 of those years, in the Public Service. The reason I’m writing is regarding our somewhat old and outdated system in which members of that Public Service and most of the Private Sector are still being paid.
I’m a 1971 born baby and have known my parents, grandparents, and aunts etc., all after working, got paid once a month. Now let’s think about this, all bills (rent, mortgage, light bills, phone bills, car note, etc.,) all are due once per month; and an employee receives a salary once per month. By the time of your pay period, your bills are due. Furthermore, some bills are due in the middle of the month depending on when that service started, making Guyana one of the only countries still to have a once per month salary system.
Research shows that even though you make the same amount of money, regardless of your pay frequency, a bimonthly pay schedule makes it easier to reduce debt, ultimately saving you more money. Tell me, what employee would not want to be paid bimonthly, or twice per month, 24 times per year, rather than 12? Now I’m aware that this suggestion may not be a favourite one for employers, but history has shown that with happy employees’ results in better work production.
According to Indeed, larger paycheck yield:
● Bimonthly pay typically yields larger paycheck for employees compared to other compensation structures due to relative frequency.
● Simplified deduction management: Bimonthly pay offers simplified deductions as it appears on a regular basis and typically results in the same deductions between pay periods.
● Eddy/HR Encyclopedia. More cash crunches with monthly salary: The biggest downside to a monthly paycheck frequency is that if you go through your available cash before the end of the month, you will either have to borrow money, use interest-bearing credit cards or do without until the end of the month. Depending on how you receive your payment, you might need to wait several days until after you get your payment to be able to spend it or pay bills.
● Higher interest payments with monthly salary: The longer you wait to get paid, the longer you’ll have to carry interest on your credit or other loans if you’re using your work income to pay down credit early. For example, if you are paid $25,000 per week and gets paid on the 1st and 15th of each month, depending on how you receive your payment, you can use your excess pay to begin paying down credit balances twice each month. If you earn a monthly salary and have to wait until the end of the month to get paid, you’ll have to pay interest on that debt for another two weeks until you can pay it down.
● Tracking overtime: While a monthly payroll can simplify things like benefit deductions, it can complicate overtime pay. Regardless of the payment schedule, you have to pay employees overtime if they work more than the number of hours required a week. With a monthly payroll, you must be extra careful to make sure overtime hours are being tracked each week correctly and then paid out at the end of the month.
● Makes the end of month busy: Conversely, while a monthly payroll limits payroll costs and time spent, it can make the end of the month a little busier than normal for a payroll team. Because the time spent on a payroll isn’t spread out over the month, all the time is focused on the last week of the month. It might not take as long as a whole, but it can make that last week a little more hectic than processing payroll for a bi-weekly, semi-monthly, or weekly payroll schedule.
Employers, reasons to avoid monthly payroll system. While there are some advantages of a monthly payroll, most employers have moved away from using a monthly payroll. According to the US Bureau of Labour Statistics (BLS), only 11.3% of employees are paid monthly. This is mainly due to the inconvenience it creates for employees and how difficult it can be to track an entire month’s worth of payroll at a time. Both of these are key factors why a company should avoid a monthly payroll. In closing, I humbly believe that a reform is needed, more so, in a country (Guyana) with one of the fastest growing economies in the world.
Sincerely,
Andre Sobers