New Minimum Wage
Discussion
I've been trying to get my head around the Chancellor's proposal for the minimum wage to have got to £9.00/hr by 2020. By my reckoning that's going to need a 6.5% rise every year for 5 years for someone already on the NMW.
He has also proposed holding public sector wage rises down to 1% pa.
Yet people currently on £9.00 per hour are going to be pretty peeved in 2020 when they are earning £9.45 and the unskilled labourer /cleaner is now on £9.00, so that won't work out too well.
And how is this going to fix our perceived productivity problems, if people doing the same work as now are paid nearly 40 % more?
Surely there are going to be a load of people thrown out of work because of this.
Does anyone else see the potential for disaster here?
He has also proposed holding public sector wage rises down to 1% pa.
Yet people currently on £9.00 per hour are going to be pretty peeved in 2020 when they are earning £9.45 and the unskilled labourer /cleaner is now on £9.00, so that won't work out too well.
And how is this going to fix our perceived productivity problems, if people doing the same work as now are paid nearly 40 % more?
Surely there are going to be a load of people thrown out of work because of this.
Does anyone else see the potential for disaster here?
Blue Cat said:
The higher the minimum wage, the less that will have to be paid out in benefits to working people, so a cost saving.
Employees should be paying their staff a living wage, not expected the Govt to make up the short fall which is what is happening at the moment
This ^^^Employees should be paying their staff a living wage, not expected the Govt to make up the short fall which is what is happening at the moment
At the moment, loads of people on minimum wage are getting Tax Credits to bring their income up to a "living wage". This allows businesses to pay low wages that don't provide a living wage as they know that the Government will make up the shortfall. It is effectively giving big businesses that have a lot of minimum-wage employees millions of pounds of subsidy from taxpayers every year.
Just done some very quick calculations as my business has quite a few staff on min wage at certain times of the year.
To stay as I am my business will need to turn over c.20% more from 2020 to cover the costs.
Who pays me the living wage? I guess I don't count?!
Also, because of the industry I work in a lot of the B2B we do will be impacted.
I just cant see this ending well.
To stay as I am my business will need to turn over c.20% more from 2020 to cover the costs.
Who pays me the living wage? I guess I don't count?!
Also, because of the industry I work in a lot of the B2B we do will be impacted.
I just cant see this ending well.
Blue Cat said:
The higher the minimum wage, the less that will have to be paid out in benefits to working people, so a cost saving.
Employees should be paying their staff a living wage, not expected the Govt to make up the short fall which is what is happening at the moment
Exactly right.Employees should be paying their staff a living wage, not expected the Govt to make up the short fall which is what is happening at the moment
The taxpayer is subsiding big businesses that are only paying minimum wage.
wilwak said:
Exactly right.
The taxpayer is subsiding big businesses that are only paying minimum wage.
So what about the small businesses who pay the minimum wage, ie practically all of them, do they just go to the wall and you don't care? The taxpayer is subsiding big businesses that are only paying minimum wage.
This isn't really about having a minimum wage, this is about having a default wage. The NMW didn't affect my business at all as everyone has always been paid above it. This is a completely different proposal, several magnitudes greater in scale.
If I cannot put my prices up by 10-20% to cover the additional cost then quite simply those people nearer the bottom will loose their jobs. We're not all multinationals hiding our ill gotten gains in the Seychelles!
Undirection said:
Ean218 said:
If I cannot put my prices up by 10-20% to cover the additional cost then quite simply those people nearer the bottom will loose their jobs. We're not all multinationals hiding our ill gotten gains in the Seychelles!
You may have to but then so will everyone else.
1) What if the customers decide the product isn't worth buying at that price?
2) If all the prices go up, what's the point of the wage increase?
red_slr said:
Just done some very quick calculations as my business has quite a few staff on min wage at certain times of the year.
To stay as I am my business will need to turn over c.20% more from 2020 to cover the costs.
Who pays me the living wage? I guess I don't count?!
Also, because of the industry I work in a lot of the B2B we do will be impacted.
I just cant see this ending well.
But as an entrepreneur who is fortunate enough to employee quite a few staff, you'll find a way.To stay as I am my business will need to turn over c.20% more from 2020 to cover the costs.
Who pays me the living wage? I guess I don't count?!
Also, because of the industry I work in a lot of the B2B we do will be impacted.
I just cant see this ending well.
I'm no left wing wet, but the living wage is the right thing to do, both morally and for business to take some social responsibility. Most businesses these days have some kind of CSR policy, well a living wage seems like a good start to actually meaning it.
Its just going to end badly for all.
Prices will climb, interest rates will climb. Business will borrow more, people will borrow more... we have been here before. But its ok Billy, you *earn* £9 / hr now mate....
Don't get me wrong I don't think we can live a false economy for ever and yes the country is living off QE still but small business supports a massive % of the work force.
I am secretly hoping this increase forces my competitors out of business!!! However knowing what I now know it just means they will find a way, borrow more, sell *CHEAPER* to get the turnover and sacrifice the profits just to survive and pay the loans.
I predict some serious SHTF by 2025... mark my words.
If HM Govt really is going to force wages up by 30%+ in the space of 5 years my whole outlook on the UK is going to change rapido and I can assure you I wont be the only one.
Prices will climb, interest rates will climb. Business will borrow more, people will borrow more... we have been here before. But its ok Billy, you *earn* £9 / hr now mate....
Don't get me wrong I don't think we can live a false economy for ever and yes the country is living off QE still but small business supports a massive % of the work force.
I am secretly hoping this increase forces my competitors out of business!!! However knowing what I now know it just means they will find a way, borrow more, sell *CHEAPER* to get the turnover and sacrifice the profits just to survive and pay the loans.
I predict some serious SHTF by 2025... mark my words.
If HM Govt really is going to force wages up by 30%+ in the space of 5 years my whole outlook on the UK is going to change rapido and I can assure you I wont be the only one.
Dr Jekyll said:
Joey Ramone said:
Same arguments made when the original minimum wage was introduced. Didn't lead to massive job losses.
http://www.nber.org/papers/w12663For example, in the retail sector, a 25% increase in labour cost has been found to only produce a 15.4% increase in total cost, on average. That's because there are scores of channels of adjustment a business can use to mitigate the effects of this wage increase. A metastudy found among business owners that these were the most common:
- Increases in training and development. This is seen as motivating for employees, and labour turnover is seen to decrease as a result of minimum wage increases. This means less money spent hiring and training new starters, and more time focusing on their current employee base in order to cross-train and diversify the amount of duties one person can do.
- Reducing work hours and removing overtime. Rather than cut down on employees, employers always seek to cut working hours first. This means unemployment doesn't increase, but the salaries of employees actually decreases in absolute terms, as they're getting paid fractionally more but doing significantly less hours.
- Wage compression. If you earn just a tad over the minimum wage, you'll be sure to see your wage frozen until the minimum wage catches up. This means no pay rises for many employees for at least a year, often far more.
And MANY more...
TL;DR: Unemployment doesn't go up because of minimum wage, but those at the lowest earnings brackets actually find their salaries reduced as a result in minimum wage increases. It's a completely counter productive programme.
Edited by AdamFX on Wednesday 8th July 20:34
wilwak said:
Blue Cat said:
The higher the minimum wage, the less that will have to be paid out in benefits to working people, so a cost saving.
Employees should be paying their staff a living wage, not expected the Govt to make up the short fall which is what is happening at the moment
Exactly right.Employees should be paying their staff a living wage, not expected the Govt to make up the short fall which is what is happening at the moment
The taxpayer is subsiding big businesses that are only paying minimum wage.
Much better for individuals to be earning their money, than have it handed to them in benefits.
Dr Jekyll said:
1) What if the customers decide the product isn't worth buying at that price?
2) If all the prices go up, what's the point of the wage increase?
In theory, NLW = reduction in Tax Credits = fall in taxes (eg. CT).
I think it's a good idea.
Caveat: I have no idea what I am talking about, so I am probably very wrong.
Global enterprises have a need for the staff on minimum wage, these are often the people who keep things going, keep the offices and environments of work up to a standard that meet working conditions. These people are often overworked and there departments already under staffed. In this environment I don't see the change in minimum wage affecting these people, I don't see job cuts for them.
In this type of environment its the skilled professionals I see being affected. There are a lot of job roles that will be out sourced by big companies, this happens everyday so I would not blame the raise in the minimum wage for this movement, but it will mean these big companies do more of this to supplement the loss they perceive they are making now that they have to pay people fairly.
Of course this is different for each industry.
I'm not sure I see the direct link between this and increased interest rates, interest rates are being kept low in part because of the number of house holds who would not be able to afford mortgage repayments or to live if they did increase dramatically, I dont think being in that position is in anyway aligned to being a minimum wage earner, if wages for the bottom increase then I expect the wages for the middle to stagnate or continue to, which will reduce spending which again will not cause a rise in interest rates? Like I said at that start I am almost certainly wrong... But then we are all guessing aren't we.
Global enterprises have a need for the staff on minimum wage, these are often the people who keep things going, keep the offices and environments of work up to a standard that meet working conditions. These people are often overworked and there departments already under staffed. In this environment I don't see the change in minimum wage affecting these people, I don't see job cuts for them.
In this type of environment its the skilled professionals I see being affected. There are a lot of job roles that will be out sourced by big companies, this happens everyday so I would not blame the raise in the minimum wage for this movement, but it will mean these big companies do more of this to supplement the loss they perceive they are making now that they have to pay people fairly.
Of course this is different for each industry.
I'm not sure I see the direct link between this and increased interest rates, interest rates are being kept low in part because of the number of house holds who would not be able to afford mortgage repayments or to live if they did increase dramatically, I dont think being in that position is in anyway aligned to being a minimum wage earner, if wages for the bottom increase then I expect the wages for the middle to stagnate or continue to, which will reduce spending which again will not cause a rise in interest rates? Like I said at that start I am almost certainly wrong... But then we are all guessing aren't we.
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