A new report published by the Trades Union Congress (TUC) has claimed the stagnation of pay levels for most British people in the last few years has made them more likely to experience debt problems.
The report, entitled ‘Britain’s Livelihood Crisis’, looked at economic growth and the rates of pay for low, median and top earners between 1978 (the last year before Margaret Thatcher was elected) and 2008, which is the year in which the recession first began in the UK.
Researchers found that during this period, the economy nearly doubled in size but British people on low incomes saw just a 27 per cent rise in household wealth. Meanwhile, middle earners experienced a 56 per cent increase.
The report also pointed out that in contrast, a small section of top earners saw their incomes rise astronomically, such as lawyers who saw their pay rise by 114 per cent. This demonstrates a considerable widening of the pay gap, leaving many low earners with no choice but to rely on consumer credit to cover their current lifestyles.
The ‘Britain’s Livelihood Crisis’ report states:
“Although severe debt problems can sometimes be the result of poor money management, the evidence is that the great majority of problems of default arise because of external shocks and a sudden fall in income arising from redundancy, reductions in pay or hours worked, business closure, family break-up or ill-health.
“Indeed, an important consequence of the growth of indebtedness has been the increased risk of financial hardship associated with worklessness or falls in pay.”
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