Liz Truss Prime Minister
Discussion
Gecko1978 said:
Maybe we need to have less people who don't pay in at all. So rather than getting tax credits to work we encourage living wage and remove tax credits. Essentially the state (tax payers) don't under write poor wages.
Would higher basic wages just lead to inflation, removing any gain in the process? Legacywr said:
Gecko1978 said:
Maybe we need to have less people who don't pay in at all. So rather than getting tax credits to work we encourage living wage and remove tax credits. Essentially the state (tax payers) don't under write poor wages.
Would higher basic wages just lead to inflation, removing any gain in the process? Derek Smith said:
Legacywr said:
Gecko1978 said:
Maybe we need to have less people who don't pay in at all. So rather than getting tax credits to work we encourage living wage and remove tax credits. Essentially the state (tax payers) don't under write poor wages.
Would higher basic wages just lead to inflation, removing any gain in the process? So, if you've got a worker that isn't capable of being particularly productive, you've got a choice between allowing a company to pay them what they're worth (not very much) and then having the tax payer cover the rest of their living expenses ... or ... you set a minimum wage which prices the worker out of the market so they remain unemployed and the tax payer has to cover all of their living expenses.
The latter situation is worse for all involved. There is less economic activity happening because the worker isn't being allowed to add their little bit of productivity to the economy. It's worse psychologically for the worker because society is telling them they're not valued in the workplace at all, unlike most adults. And it's obviously worse for the tax payer.
The principle of in-work benefits is fine. The problem is how you design the system so that it doesn't create perverse incentives nor opportunities for exploitation of the system by companies or workers to free load on the tax payer.
ATG said:
Higher basic wages leads to relatively unproductive jobs simply not being viable. The jobs will cease to exist.
So, if you've got a worker that isn't capable of being particularly productive, you've got a choice between allowing a company to pay them what they're worth (not very much) and then having the tax payer cover the rest of their living expenses ... or ... you set a minimum wage which prices the worker out of the market so they remain unemployed and the tax payer has to cover all of their living expenses.
The latter situation is worse for all involved. There is less economic activity happening because the worker isn't being allowed to add their little bit of productivity to the economy. It's worse psychologically for the worker because society is telling them they're not valued in the workplace at all, unlike most adults. And it's obviously worse for the tax payer.
The principle of in-work benefits is fine. The problem is how you design the system so that it doesn't create perverse incentives nor opportunities for exploitation of the system by companies or workers to free load on the tax payer.
You accept as a given that very high housing costs (especially) are reasonable and should be subsidised by the taxpayer. Rather than, say, the government doing some governing, regulating housing costs, ensuring sufficient supply, etc.So, if you've got a worker that isn't capable of being particularly productive, you've got a choice between allowing a company to pay them what they're worth (not very much) and then having the tax payer cover the rest of their living expenses ... or ... you set a minimum wage which prices the worker out of the market so they remain unemployed and the tax payer has to cover all of their living expenses.
The latter situation is worse for all involved. There is less economic activity happening because the worker isn't being allowed to add their little bit of productivity to the economy. It's worse psychologically for the worker because society is telling them they're not valued in the workplace at all, unlike most adults. And it's obviously worse for the tax payer.
The principle of in-work benefits is fine. The problem is how you design the system so that it doesn't create perverse incentives nor opportunities for exploitation of the system by companies or workers to free load on the tax payer.
The discussion is far wider and more nuanced than simply an either/or choice between higher basic wages or in-work benefits.
ATG said:
Higher basic wages leads to relatively unproductive jobs simply not being viable. The jobs will cease to exist.
So, if you've got a worker that isn't capable of being particularly productive, you've got a choice between allowing a company to pay them what they're worth (not very much) and then having the tax payer cover the rest of their living expenses ... or ... you set a minimum wage which prices the worker out of the market so they remain unemployed and the tax payer has to cover all of their living expenses.
The latter situation is worse for all involved. There is less economic activity happening because the worker isn't being allowed to add their little bit of productivity to the economy. It's worse psychologically for the worker because society is telling them they're not valued in the workplace at all, unlike most adults. And it's obviously worse for the tax payer.
The principle of in-work benefits is fine. The problem is how you design the system so that it doesn't create perverse incentives nor opportunities for exploitation of the system by companies or workers to free load on the tax payer.
A low minimum wage and in-work benefits, I suspect, has led to the UK having low productivity versus some of our peers. If a company is can expand by hiring ten MW workers rather than investing £1mio in a machine that speeds the current workforce, they choose the former. We have low unemployment numbers to make politicians look good. It makes immigration a necessity if we are going to grow. So, if you've got a worker that isn't capable of being particularly productive, you've got a choice between allowing a company to pay them what they're worth (not very much) and then having the tax payer cover the rest of their living expenses ... or ... you set a minimum wage which prices the worker out of the market so they remain unemployed and the tax payer has to cover all of their living expenses.
The latter situation is worse for all involved. There is less economic activity happening because the worker isn't being allowed to add their little bit of productivity to the economy. It's worse psychologically for the worker because society is telling them they're not valued in the workplace at all, unlike most adults. And it's obviously worse for the tax payer.
The principle of in-work benefits is fine. The problem is how you design the system so that it doesn't create perverse incentives nor opportunities for exploitation of the system by companies or workers to free load on the tax payer.
However, I question whether it is good for the country long term (not the immigration but the lack of investment).
However, we are where we are. It is going to be a very difficult road to raise minimum wages without cratering international competitiveness. We need to invest in up-skilling our workforce, better educating our children, proper training and apprenticeships. We need to change the mindset of many businesses about investing in their future. We need to encourage investors to look 10 years ahead not backwards one quarter. These things take decades. Politicians are incapable of thinking that far ahead. They live poll to poll.
AstonZagato said:
A low minimum wage and in-work benefits, I suspect, has led to the UK having low productivity versus some of our peers. If a company is can expand by hiring ten MW workers rather than investing £1mio in a machine that speeds the current workforce, they choose the former. We have low unemployment numbers to make politicians look good. It makes immigration a necessity if we are going to grow.
However, I question whether it is good for the country long term (not the immigration but the lack of investment).
However, we are where we are. It is going to be a very difficult road to raise minimum wages without cratering international competitiveness. We need to invest in up-skilling our workforce, better educating our children, proper training and apprenticeships. We need to change the mindset of many businesses about investing in their future. We need to encourage investors to look 10 years ahead not backwards one quarter. These things take decades. Politicians are incapable of thinking that far ahead. They live poll to poll.
I was on a business trip back to the UK, visiting a large airline near Heathrow. Opposite their HQ was a hand car wash. Symptomatic of how productivity has stalledHowever, I question whether it is good for the country long term (not the immigration but the lack of investment).
However, we are where we are. It is going to be a very difficult road to raise minimum wages without cratering international competitiveness. We need to invest in up-skilling our workforce, better educating our children, proper training and apprenticeships. We need to change the mindset of many businesses about investing in their future. We need to encourage investors to look 10 years ahead not backwards one quarter. These things take decades. Politicians are incapable of thinking that far ahead. They live poll to poll.
Rufus Stone said:
wisbech said:
I was on a business trip back to the UK, visiting a large airline near Heathrow. Opposite their HQ was a hand car wash. Symptomatic of how productivity has stalled
How so?HighwayStar said:
Indeed! I’m curious about how a hand carwash is indicative of the downfall of productivity too….
The number of automatic car washes has fallen considerable in recent years. From around 9000 to around 4200 to be replaced by hand car washes. The problem with viewing this as a microcosm of the British economy is that the automatic ones can potentially damage the paintwork. Though of course without access to cheap migrant labour they may have improved the machines to counteract this. JagLover said:
The number of automatic car washes has fallen considerable in recent years. From around 9000 to around 4200 to be replaced by hand car washes. The problem with viewing this as a microcosm of the British economy is that the automatic ones can potentially damage the paintwork. Though of course without access to cheap migrant labour they may have improved the machines to counteract this.
How much is a mechanical car wash compared to a hand car wash?JagLover said:
HighwayStar said:
Indeed! I’m curious about how a hand carwash is indicative of the downfall of productivity too….
The number of automatic car washes has fallen considerable in recent years. From around 9000 to around 4200 to be replaced by hand car washes. The problem with viewing this as a microcosm of the British economy is that the automatic ones can potentially damage the paintwork. Though of course without access to cheap migrant labour they may have improved the machines to counteract this. JagLover said:
The number of automatic car washes has fallen considerable in recent years. From around 9000 to around 4200 to be replaced by hand car washes. The problem with viewing this as a microcosm of the British economy is that the automatic ones can potentially damage the paintwork. Though of course without access to cheap migrant labour they may have improved the machines to counteract this.
I was about to say something about perhaps people preferring manual car washes, but then I realised it's a good example of the current state of play. Get rid of the cheap labour, thinking we've done ourselves a massive favour only to find no one wants the "improved machines" and we're back to paying more for quality car washes.JagLover said:
HighwayStar said:
Indeed! I’m curious about how a hand carwash is indicative of the downfall of productivity too….
The number of automatic car washes has fallen considerable in recent years. From around 9000 to around 4200 to be replaced by hand car washes. The problem with viewing this as a microcosm of the British economy is that the automatic ones can potentially damage the paintwork. Though of course without access to cheap migrant labour they may have improved the machines to counteract this. It certainly have a much better wash than any automated system which struggle to reach some parts because of the difference in shapes of car.
As a reference point, in Spain, they have kept the mechanical washers (and the old skool self-sprayer units down the side of the garage near the tyre inflator machine) but that means that the person(s) who could/would wash you car manually are instead filling your car up for you with fuel, U.S.A 1950s style as you sit inside.
Manually done washes in multi-story car parks are still a thing too, mostly because of the heat but because they combine kwik-fit style services within special parking spaces and will service/clean your car whilst you are out shopping.
I think in the U.K it was a double hit of low-skilled low-paid labour finding a place in the economy plus the pressure of deals that were done to increase the revenue of petrol stations by installing a mini-supermarket into almost everyone.
Typically British, they were done for the lowest cost by typically, knocking down the mechanical washers and building a supermarket over the top.
The 88 page economics report is now available for a free download.
https://www.niesr.ac.uk/publications/pre-election-...
Extract
"Low growth and persistent inflation, combined with flatlining productivity, corresponds to a
stalled recovery in living standards for households in the bottom half of the income distribution.
While aggregate real personal disposable income is projected to rise by 2.8 per cent this year, the
distributional picture is different, once we account for household composition and housing costs.
Given higher rents and mortgage repayments, the gains from real wage growth for households in
income deciles 2-5 are wiped out. Besides the poorest, the ‘squeezed middle’ are also struggling
to get by.
Greater public and private investment is key to boosting growth and productivity, yet the fiscal
rules are constraining the government from raising productivity-enhancing public investment,
which can also help unlock more business investment. For the foreseeable future, the United
Kingdom is stuck in a low-level equilibrium of slow growth, which reflects poor productivity
performance, skills mismatches, and insufficient investment."
JagLover said:
HighwayStar said:
Indeed! I’m curious about how a hand carwash is indicative of the downfall of productivity too….
The number of automatic car washes has fallen considerable in recent years. From around 9000 to around 4200 to be replaced by hand car washes. The problem with viewing this as a microcosm of the British economy is that the automatic ones can potentially damage the paintwork. Though of course without access to cheap migrant labour they may have improved the machines to counteract this. AstonZagato said:
A low minimum wage and in-work benefits, I suspect, has led to the UK having low productivity versus some of our peers. If a company is can expand by hiring ten MW workers rather than investing £1mio in a machine that speeds the current workforce, they choose the former. We have low unemployment numbers to make politicians look good. It makes immigration a necessity if we are going to grow.
However, I question whether it is good for the country long term (not the immigration but the lack of investment).
However, we are where we are. It is going to be a very difficult road to raise minimum wages without cratering international competitiveness. We need to invest in up-skilling our workforce, better educating our children, proper training and apprenticeships. We need to change the mindset of many businesses about investing in their future. We need to encourage investors to look 10 years ahead not backwards one quarter. These things take decades. Politicians are incapable of thinking that far ahead. They live poll to poll.
I would largely agree with this. The sensible options are;However, I question whether it is good for the country long term (not the immigration but the lack of investment).
However, we are where we are. It is going to be a very difficult road to raise minimum wages without cratering international competitiveness. We need to invest in up-skilling our workforce, better educating our children, proper training and apprenticeships. We need to change the mindset of many businesses about investing in their future. We need to encourage investors to look 10 years ahead not backwards one quarter. These things take decades. Politicians are incapable of thinking that far ahead. They live poll to poll.
1) Businesses investing in higher productivity, which drives growth but reduces low paid/low skilled jobs which, in turn requires tax revenues to be channelled into skills and training - achievable with sustained economic growth
2) An acknowledgement of lower productivity and lower wages and lower standards of living for low skilled jobs. Low skilled vacancies filled by immigration if necessary
3) As above but with in-work benefits to artificially increase living standards for the lower skilled/lower paid.
At the moment we have three but one would be preferable, I personally find (2) a bit morally problematic but it would be infinitely preferable to Govt intervening with supply-side prices and incomes regulation as some have suggested - that way lies old school Socialist madness
Carl_VivaEspana said:
The 88 page economics report is now available for a free download.
https://www.niesr.ac.uk/publications/pre-election-...
Extract
"Low growth and persistent inflation, combined with flatlining productivity, corresponds to a
stalled recovery in living standards for households in the bottom half of the income distribution.
While aggregate real personal disposable income is projected to rise by 2.8 per cent this year, the
distributional picture is different, once we account for household composition and housing costs.
Given higher rents and mortgage repayments, the gains from real wage growth for households in
income deciles 2-5 are wiped out. Besides the poorest, the ‘squeezed middle’ are also struggling
to get by.
Greater public and private investment is key to boosting growth and productivity, yet the fiscal
rules are constraining the government from raising productivity-enhancing public investment,
which can also help unlock more business investment. For the foreseeable future, the United
Kingdom is stuck in a low-level equilibrium of slow growth, which reflects poor productivity
performance, skills mismatches, and insufficient investment."
So basically what many of us have been saying for years, usually over the sound of those dogmatically opposed to Govt taking responsibility for governing.https://www.niesr.ac.uk/publications/pre-election-...
Extract
"Low growth and persistent inflation, combined with flatlining productivity, corresponds to a
stalled recovery in living standards for households in the bottom half of the income distribution.
While aggregate real personal disposable income is projected to rise by 2.8 per cent this year, the
distributional picture is different, once we account for household composition and housing costs.
Given higher rents and mortgage repayments, the gains from real wage growth for households in
income deciles 2-5 are wiped out. Besides the poorest, the ‘squeezed middle’ are also struggling
to get by.
Greater public and private investment is key to boosting growth and productivity, yet the fiscal
rules are constraining the government from raising productivity-enhancing public investment,
which can also help unlock more business investment. For the foreseeable future, the United
Kingdom is stuck in a low-level equilibrium of slow growth, which reflects poor productivity
performance, skills mismatches, and insufficient investment."
ClaphamGT3 said:
AstonZagato said:
A low minimum wage and in-work benefits, I suspect, has led to the UK having low productivity versus some of our peers. If a company is can expand by hiring ten MW workers rather than investing £1mio in a machine that speeds the current workforce, they choose the former. We have low unemployment numbers to make politicians look good. It makes immigration a necessity if we are going to grow.
However, I question whether it is good for the country long term (not the immigration but the lack of investment).
However, we are where we are. It is going to be a very difficult road to raise minimum wages without cratering international competitiveness. We need to invest in up-skilling our workforce, better educating our children, proper training and apprenticeships. We need to change the mindset of many businesses about investing in their future. We need to encourage investors to look 10 years ahead not backwards one quarter. These things take decades. Politicians are incapable of thinking that far ahead. They live poll to poll.
I would largely agree with this. The sensible options are;However, I question whether it is good for the country long term (not the immigration but the lack of investment).
However, we are where we are. It is going to be a very difficult road to raise minimum wages without cratering international competitiveness. We need to invest in up-skilling our workforce, better educating our children, proper training and apprenticeships. We need to change the mindset of many businesses about investing in their future. We need to encourage investors to look 10 years ahead not backwards one quarter. These things take decades. Politicians are incapable of thinking that far ahead. They live poll to poll.
1) Businesses investing in higher productivity, which drives growth but reduces low paid/low skilled jobs which, in turn requires tax revenues to be channelled into skills and training - achievable with sustained economic growth
2) An acknowledgement of lower productivity and lower wages and lower standards of living for low skilled jobs. Low skilled vacancies filled by immigration if necessary
3) As above but with in-work benefits to artificially increase living standards for the lower skilled/lower paid.
At the moment we have three but one would be preferable, I personally find (2) a bit morally problematic but it would be infinitely preferable to Govt intervening with supply-side prices and incomes regulation as some have suggested - that way lies old school Socialist madness
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