I have been listening lately to a lot of loose talk about the evil Wonga, sending out fake solicitors’ letters to borrowers etc who fail to pay up. There has been much hand-wringing and chest-beating about how it’s ‘so disgusting’ that they hound these hapless people.
The hand-wringers, including many media pundits say, ‘We must put checks on these evil pay day loan companies!’ But I say they are concentrating on the effect rather than the cause. The clue, for all these folk incapable of original thought, is in the name, ‘PAY DAY LOAN’. Apart from a small minority of feckless borrowers and losers, essentially pay day loans are designed as a LOAN to tide honest but lowly paid people over until PAY DAY.
In the dim distant past when god was a boy, people on modest incomes were paid WAGES. And they came in manilla envelopes with holes in them, containing cash…and they were paid WEEKLY! In other words, you started work on Monday and you got your money on Friday. More posh people with higher incomes were paid MONTHLY and they received SALARIES and they were paid into their bank accounts. Because once upon a time only posh people had bank accounts – including me, although I’m not really posh.
On top of all this, globalisation has allowed large businesses to basically take the piss (technical term) out of ordinary workers. In 1984 I used to pay my assistant £10.00 an hour. The going rate, 30 years later is about…£10.00 an hour. In the meantime, property and rental prices have increased a little bit as you may have noticed.
So, what we have is a situation where lowly paid people are forced to give major companies an average of 15 days’ credit every month. This is because they supply their labour on the first day of the month but don’t receive their pay until 30 days later, thus giving an average of 15 days’ credit to their employers! In the meantime, they may be faced with unavoidable one-off expenses like they need their car repaired (in order to get to work) and have to BORROW from Mr Wonga or others to pay the mechanic, who won’t advance them credit. The same case could be that they need to pay their landlord the rent, so they top up what they need by borrowing from a PAY DAY LOAN company.
These companies exist because there is a need for them and part of that need has been created by the nonsense of everybody having to wait 30 days to be paid and then the money is paid into their BANK account. And we all know about how sympathetically banks deal with poor people who go overdrawn, don’t we.
The answer I think, is that it should be made compulsory in law for people below a certain level of pay to be offered the option of receiving their money WEEKLY.