Debt help may be needed following pay cuts

25/01/2010

Private sector workers have gradually come to expect pay cuts and losses of bonuses during the recession, but their public sector equivalents may struggle to balance their debt payments following an announcement that their wages will also be limited.

Chancellor Alistair Darling told the Times that over-paid positions in the public sector should be capped in line with private sector businesses, two-thirds of which intend to implement wage freezes or pay cuts this year in a big to avoid redundancies.

Mr Darling told the paper: "It is not altogether clear to me why we pay very large salaries to people to do the same jobs as were being done ten years ago for rather less."

He added: "What is being paid has sometimes lost the relationship it ought to have with what someone actually does. Once that happens, it's not only unfair, it's actually grossly inefficient."

A one per cent cap on future pay rises in the public sector has been announced by Mr Darling following the 3.8 per cent rise that was seen this year.

Kevin Still, EuroDebt director, commented: "The Chancellor's approach to fairness seems rather selective and doesn't mask the fact that many public and private sector workers will need debt help because costs of living are outstripping increases (if any) in income.

"Disposable income is being squeezed on all fronts and the cost of unsecured credit is rising because of interest rate hikes, leading to more credit card debt. We expect more people to seek some form of debt relief, when juggling personal finances is no longer possible."

Tags; Income Worries and Debt,

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