A NEW report has found that workers in the UK are financially worse off than they were in 2018, with more than eight in 10 using high-cost credit to see them through to payday.
According to new research by Hastee Pay, the number of working adults arranging payday loans, spending on credit cards, or dipping into their overdrafts has risen from 78 per cent in 2018 to 82 per cent in 2019.
Hastee Pay’s 2019 Workplace Wellbeing Study also found that 39 per cent of employees missed at least one shift because they could not afford the travel expense of getting to work.
Nearly three-quarters of respondents admitted they struggled with stress stemming from personal finance issues, made worse by the need to find short-term credit which can incur high rates and hidden fees.
More than 50 per cent of the survey respondents said they had had problems paying back overdrafts in 2019, compared to four in 10 the previous year.
These numbers are repeated across all forms of high-cost credit. Workers reported a more than 10 per cent rise in 2019 in struggling to pay back loans from friends and family, paying off credit cards or settling payday loans or unregulated doorstep lending.
In May 2018, the Financial Conduct Authority (FCA) announced a raft of new measures to combat financial exploitation and to protect some of the UK’s most vulnerable working families.
At the time, the FCA’s chief executive Andrew Bailey said: “High-cost credit is used by over three million consumers in the UK.”
The FCA targeted store cards and home-collected credit, focusing on reforming the rent-to-own sector, as well as pressuring banks to reduce overdraft charges to keep workers out of debt.
In 2016 British banks made an estimated £2.3bn from overdrafts, with around £700m coming from charges for unarranged overdrafts.
Bailey noted: “Our immediate proposed changes will make overdraft costs more transparent and prevent people unintentionally dipping in to an overdraft in the first place.”