A recent report warned that a quarter of all workers could face financial ruin in a matter of weeks if they were to lose their jobs.
Most individuals do not have the benefit of savings to tide them through a period of unemployment, mainly because they don’t have any surplus income to put into a savings account at the end of each month.
The report found that approximately 50% of this country’s 29 million workers could live off their savings for four months. Four months being the average time that a person remains jobless after redundancy.
Even if individuals cut out their luxury items, they would need a minimum of £1,077 a month, to pay their debts, mortgage and essential bills and food.
The report stated “As a rule of thumb, it has long been considered sensible for families to have cash savings of at least 3 months income for any of life’s emergencies”
The warning comes after the Bank of England sounded the alarm last week about an unemployment crisis.
The number of employers recruiting staff had dropped to its lowest since records started in 1997. The report also found evidence of employers refusing to fill job vacancies which become available when a member of staff resigns, retires or dies.
Other examples of cost cutting by employers include relying on cheaper temporary workers, even in management roles.
One of the biggest casualties is likely to be the house building sector with predictions of “tens of thousands” of jobs disappearing in this industry.
Unemployment hit 1.6 million in March. This is up 14,000 since January of this year. Predictions are that it will hit 2.3 million by the end of next year, the highest level since 1996.
Sarah Walford at local debt advisers revivalforyou.co.uk says “If you are currently struggling to meet your financial commitments, please seek help sooner rather than later. The earlier you ask for help, the more options that are available to you”