Workers borrow £660 a month to make ends meet as Wonganomics' grip tightens
The amount of money that hard pressed Unite members have to borrow each month to make ends meet has tripled since 2012 to £660, a new survey reveals.
The shock figures – coming a week after controversial payday lender Wonga announced profits topping £1 million a week – prompted Unite, the country's largest union, to call today for immediate action to restore incomes and legislation to clamp down on subprime lenders.
The independent survey conducted by Mass1 of 4,087 Unite members in the week 25-30 August showed people are borrowing £660 this month compared to £328 in September 2012. The figure has more than trebled from the £200 being borrowed in March 2012.
A total of 67 per cent of those members surveyed, who say that they must borrow, run out of money by the third week after they are paid. Unite has dubbed this 'Wonga week' to reflect that it is the subprime sector that is benefitting greatest from people's hardship.
While the number resorting to payday lenders remains unchanged since 2012 at one in eight borrowers (12 per cent), the amount that workers are borrowing has more than tripled from £200 to £660 per month.
This suggests that rather than turning to these lenders for short-term help, they are falling deeper into debt. One grim statistic is that 68 per cent of users of payday lenders need to return again the following month.
An additional third are relying on bank and credit cards. Increasingly, people are digging into their savings and taking second jobs, and relying less on their family and friends, to bridge the financial gap.
Unite general secretary Len McCluskey said:
“It is a tragic consequence of this government's economic policy that those with the least are shouldering the biggest debt burden.
"Low wages and insecure employment are destroying incomes, forcing people to turn to payday lenders with their outrageous interest rates.
"This is a personal debt pile-up that cannot be ignored and certainly ought to correct overblown claims of economic recovery.
"No recovery can be built on hardship and misery. But this government could arrest this debt spread quickly and easily. Firstly it must toughen up the regulations covering subprime lenders, which are the most relaxed in the western world.
“However their clear reluctance to take any action at all suggests that ministers are far too close to this industry - with Wonga founder, Adrian Beecroft, ensconced as a government advisor - and will not lift a finger to stop it profiting from people's everyday hardship.
"Secondly and very importantly, the government must address the real cause of financial need - falling incomes. It can do this very easily by immediately raising the minimum wage by £1.50 per hour, so putting money into the pockets of millions, while cutting the benefits bill in so doing and keeping people safe from the loan sharks.
“The country is suffering the biggest economic squeeze since the 1870s. It deserves better than madcap Wonganomics and policies that aid the rich and powerful, while nearly one million people have been out of work for more than a year, 1.5 million who work part-time want a full-time job and possibly some five million people are on insecure zero hour contracts earning as little as £500 per month.
“The Unite survey shows that those who are borrowing are now borrowing the equivalent of more than one week's average wage every month.
“Estimates show that had the national minimum wage kept pace with living costs, it would now be worth £19 per hour, not the present £6.19, due to rise by a measly 12p on 1 October.”
