Minimum wage should be raised say Oxfam

Construction worker on low pay

Many workers on low incomes are facing poverty according to Oxfam, who argue that working is not necessarily a way out of poverty.

Oxfam warned in "The Perfect Storm Report" of benefit cuts, rising living cost and unemployment.

You might assume that many people in poverty don't work, but official figures suggest that six in every 10 of the 7.9 million adults in poverty live in households where at least one person works. Oxfam says that austerity measures are impacting low wage earners "disproportionately" badly.

Director of UK poverty at Oxfam commented:

"Despite the Government's rhetoric about making work pay, having a job is no longer necessarily enough to lift someone out of poverty. more working-age adults in poverty now live in working households than in workless ones."
Director of UK poverty at Oxfam, Chris Johnes

One fifth of UK population live in poverty

According to the report, 13.5 million people live in poverty in the UK, equivalent to one fifth of the population.

The report calls for the cuts to working tax credits to be reversed, the withdrawal rate for Universal Credit (the new simplified benefit) to be reduced from 65% to 55% - which Oxfam argues would leave working people better off working than not working, and increasing the national Minimum Wage in line with inflation or average earnings - whichever is higher.

The report defines poverty in the UK as material deprivation of things like fuel ("heating or eating"), having to visit different shops to buy the best deals and being unable to afford simple luxuries such as having friends or family over for a meal. It goes on to state: "Debt is a major concern for people living in poverty and is likely to become more acute in coming years."

Poverty and debt

Being in debt on a low income is arguably much harder than being in debt on a moderate or higher income. However, there are debt solutions that can help people on low incomes as well as higher incomes.

Two of these solutions are bankruptcy and DROs. Bankruptcy can write off unaffordable unsecured debts once the borrower has repaid as much as they can through the sale of assets, as well as affordable monthly payments, which may last for up to three years. There is a fee of up to 700 to go bankrupt and it stays on your credit report for six years.

An alternative is a Debt Relief Order (DRO). This is a cheaper alternative to bankruptcy (it costs 90 to apply) for people who can't afford to go bankrupt, and writes off unaffordable unsecured debts after one year. During that year, all unsecured debts are placed on a 'moratorium' - they're frozen and no interest or charges are added. The debtor also doesn't have to pay anything during that year. However, it has a similar effect on your credit rating to bankruptcy and other restrictions on income and assets apply.

These debt solutions are only available for people who are unable to repay their unsecured debts and don't qualify for other debt solutions. A debt specialist would be able to discuss your options with you.

Related resources

  • The Perfect Storm Report
  • UK poverty at Oxfam

  • Main Image (Top) iStockPhotos / Dmitry Mordvintsev

    Tags: Oxfam, employment, benefits, living costs, The Perfect Storm Report, UK poverty, poverty, minimum wage, jobs, working, Government

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