The Confederation of British Industry (CBI) believes that unemployment is set to rise to 2.9 million by the end of 2009.
Redundancy seriously impacts upon a families ability to meet their financial obligations. Buying food, paying utility bills, covering personal debt and making mortgage repayments represents a real and lasting challenge for those that don't have adequate unemployment insurance in place.
People that were struggling with debt when they were in work are unlikely to find that losing their job helps their plight. The lack of a regular income also means that negotiating a suitable monthly repayment figure with creditors is vastly more difficult for cash-strapped families. Some debt solutions are also no longer available for struggling families.
The government recently introduced the Debt Relief Order (DRO) to help low income families, however, this debt solution is only suitable for people with unsecured debts of under £15,000. The Debt Relief Order also fails to assist unemployed homeowners, as it is only permissible to have assets of under £300.
The insolvency trade body, R3, recently produced statistics showing that UK insolvency practitioners feel that levels of personal insolvency will reach a peak of 158,820 over the course of 2009. This is the equivalent of 435 people going bankrupt or entering an Individual Voluntary Arrangement (IVA) every day.
There are many debt solutions available still for struggling families. Debt Management Plans may be suitable for those families with smaller debts, but is not a legally binding agreement. Individual Voluntary Arrangements require the debtor to have over £15,000 in unsecured debts to three or more creditors, but the debtor must have a regular household income to be eligible. Personal bankruptcy remains an alternative for families dealing with serious debt, but it is not always the best option for homeowners.
Rising unemployment doesn't just affect those that have lost their job, it also affects peoples' ability to negotiate wages or secure a better employment package when they find a new job. Those that are actually in work fear for their own job security; employers realise that the bargaining power of their employees' is reduced and are better placed to control wage inflation.
The Chartered Institute of Personnel and Development conducted a survey of 2,600 people. They discovered that 25 per cent of those surveyed were not expecting a pay rise during 2009; others were even fearful of a reduction in wage levels.
According to figures produced by the Office for National Statistics (ONS), the Consumer Price Index (CPI) increased from 3 per cent to 3.2 per cent in February 2009. This means that wage growth is failing to keep pace with inflation so many employed people are also worse-off in real terms.
Since the start of the recession, redundancies and job cuts been lost across many sectors from retail to manufacturing, but the hardest hit industries for job loss has been finance, construction and estate agents. Individuals that have been made redundant should check to see if they have any insurance in place and find out what state benefits they are entitled to. If personal debt is a problem, seek debt advice and consider the available debt solutions.
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