Are we all due a pay rise?

How much do you owe? According to research from the TUC (Trades Unions Congress) there’s been a steady rise in unsecured debt that now stands at around £13,000 per household. It’s advancing towards the record high of a decade ago, when the record was reached; the difference between now and 2007 is just £100. If it continues in this fashion it could be hitting £15,000 by the end of the next parliament.

While there’s plenty of advice and help if you’re struggling, some of this debt can be controlled, but some of it cannot; there’s a disparity between inflation and average earnings of about 0.7%, meaning that our salaries are paying for less – which could be a driver for further debt. With that figure in mind, the TUC called for a higher minimum wage to try to make up the difference.

In this piece in the Guardian, TUC general secretary Frances O’Grady said “The next government must act urgently to deliver the higher wages Britain needs for sustainable growth. They must boost the minimum wage, and end pay restrictions for public servants like nurses, firefighters and midwives.”

Of course, the next government might do that. It’s certainly a key part of the SNP manifesto.

Labour has promised that it will raise the minimum wage to £10 an hour, while the Conservatives plan to push it up to £8.75 by 2020.

That’s too long to wait for some people, and despite the minimum wage requiring companies to pay £7.50 per hour to employees of 25 or over, some employers are already signing up to pay the real living wage instead. More than 3,000 employers have signed up to pay £8.45 an hour and £9.75 in London, when the law does not require them to do so.

There’s also the other end of the spectrum; those who are earning £100,000 plus or more per annum. Interestingly, rather than a pay rise, many such high earners argue they should be paying more tax in the current economic climate. The Guardian asked a snapshot of wealthy people for their views, and many responded by saying they would not be totally against a raise – but only to the point where they still earn more than they give away to the HMRC.

In the end, some of these high earners will become the employer rather than the employee and launch their own business. Then they’ll face the problem of finding enough cash to pay minimum wages mentioned above. 

No-one wants to see tens of thousands of businesses falling apart or making drastic cuts due to the legal need to pay increased wages. Presumably, if we get a higher wage, we’ll spend more, and that will reinvigorate the economy – and then pay for itself by putting more sales/services the way of the companies that raised paid the salaries in the first place. There is also the danger that they’ll use their increased wages with renewed confidence, and only swell their debt – which will magnify the problem.

There’s also the theory, elaborated on by The Big Issue, that until something is done to tackle the seemingly everlasting housing crisis, it won’t matter what wages we get paid. In the last decade, the likelihood of adults experiencing poverty while living in working households has risen by a quarter in the past decade. So raising our wages might work for some – but it won’t solve the problem completely.