Pay rates ‘hitting record low’

Those facing debt problems may include people suffering unemployment or a public sector pay freeze, but a new survey has suggested those working for private firms may be little better off.

The latest Vocalink FTSE 350 survey has found the largest firms listed on the stock exchange provided average pay rises of just 0.5 per cent in the three months to February 2010, the lowest figure it has ever recorded.

For some the situation is even worse, with people working in industry actually suffering a pay cut of 0.6 per cent, despite this being an area in which the economy is expanding quickly.

Vocalink noted such small changes in income contrast with high rates of inflation, which ensure the real-terms level of pay is falling, remarking this vindicates the view of Bank of England governor Mervyn King that “the most prolonged squeeze on real incomes since the 1920s” is taking place.

As a result, those struggling to deal with debt now may find it even harder as prices continue to outstrip inflation.

Those in a difficult situation may find debt management plans or even individual voluntary arrangements are the best ways to ease their situation.

Among the factors in price rises is the current petrol situation, where the crisis in the Arab world has led to higher costs at the pumps.

The government recently introduced a 5p cut in fuel duty in very remote parts of the country such as the Highlands and Scilly Isles.

But rural insurer NFU Mutual has complained that people in other rural areas have similar problems of long journey distances, higher petrol prices than at stations in towns and cities and a lack of public transport alternatives.

By James Francis