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Minimum wage increase 'won't help with debt problems'

By Matthew Plant

4 October2021

worker The increase in the national minimum wage will not be enough to help people struggling with their debts, according to a spokesperson for All About Money.

Taking the hourly rate up from 6.08 to 6.19, this increase works out at just 1.8%. Since the RPI rate of inflation stands at 2.9%, it means workers on the minimum wage are actually taking a pay cut 'in real terms' - they might be getting paid more, but not enough to keep pace with rising costs.

"For anyone who's worried about falling behind on their debts, the thought of a pay rise sounds like good news," said a spokesperson for All About Money.

"Once you take inflation into account, however, the result can be disappointing - there might be more pounds going into your account than last year, but each one will basically buy less than it would have last year."

Furthermore, even the 1.8% increase only applies to people aged 21 or over. People aged 18-20 are still facing a minimum wage of 4.98 per hour, while for 16-17-year-olds it's still 3.68.

"Dealing with debt problems can be hard at the best of times. At a time like this, rising prices and low or non-existent pay rises are putting strain on families' finances all over the country. If you're worried about your ability to stay on top of your debt payments alongside all your other bills, talk to a professional debt adviser. They'll be able to assess your situation and could suggest a debt solution that'll bring your debt payments down to a realistic level."

Image Laurentiu Iordache - Fotolia

Tags: minimum wage, inflation, debt

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