Low pay, insecure work and austerity feeding growing debt crisis
The TUC believes that persistent low pay is the key driver of household debt. According to the group, real wages are still lower than they were before the 2008 crisis and working families are struggling to make ends meet without going into the red.
A report by the TUC found more than half of households report having unsecured debt, most commonly in the form of credit card debt (60 per cent), overdraft (28 per cent), personal loans (25 per cent) and car finance (25 per cent).
Young people are disproportionately likely to be in debt. Seven in 10 (70 per cent) of 18 to 34-year-olds report having a type of unsecured debt. This drops to 33 per cent among people over 65.
The TUC figures also show that of those households with unsecured debt, one in five say repayments are a “heavy burden on their finances” while one in seven (14 per cent) have fallen more than two months behind on repayments in the past year. Almost half (45 per cent) don’t feel that they have enough money set aside for emergencies.
Frances O’Grady , TUC general secretary, said: “Our broken economy is forcing working families deep into debt. Low pay, insecure work and austerity have pushed millions of households to the financial cliff edge. Big corporations are raking in huge profits at working people’s expense. And successive governments have done nothing to avert the crisis.
“It’s time to reset the balance of power in our workplaces and our economy. Government must make more employers negotiate pay and conditions with unions. That will lift wages for everyone and stop working families having to rely on credit cards and overdrafts to get through the month.”