Minimum Wage To Go Up, Are you negatively effected?

CameronLove

Just curious as to whether anyone on here has been affected negatively by the new Living Wage Minimum Wage that is coming in April. (The one that Dave reckons is going to give us a better quality of life!!!)

The reason I ask is that in the last month I have had conversations with THREE different people who work in three totally different workplaces who have all been told by their employers they are having their hours reduced from the end of March. When they have asked why, they were told that the new minimum wage comes in and that for the company to keep employing them they have to reduce their hours marginally to offset the increased wage costs.

So in effect one of them who works part time on 16 hours a week is now being given a new contract she has to sign saying she will work a 12 hour week contract on the new wage. Another one who does 38 hours a week has been told from April he will only be paid 34 hours a week and the third one has said that their company has given 4 weeks notice that everyones hours are being reduced by 10% and that 5% of the workforce is being made redundant too based on "inflated wage bills coming into effect that need reducing to make the business viable".

As far as they are aware they are going to end up NO better off in terms of money that goes into their banks each month, just 3 or 4 hours extra time off each week which, if the new living wage has an effect on inflation and price increases, means they are going to end up needing a second income to compensate. They are in effect going to be WORSE off on the new living wage if prices rise as a reflection of it.

And I have also heard that some Asda employees on contracts that are less than 12 hours are being given notice over the last few weeks that they are to be made redundant at the end of March (unless someone leaves from a department that is short on staff and they can be transferred between now and then), and its all linked (according to our local store manager) to the fact that Asda HQ has ordered stores to reduce their wage bills by around 10-20% before the new minimum wage comes into effect. Our local Asda has given notice to at least 5 staff that I know off, that unless a position in a different department comes up at short notice before the end of March, that they need to look for a new job elsewhere. Some of these staff have worked there between 5-8 years now.

I just wondered if anyone on here had been told they are going to negatively be effected by it coming in, such as job losses or reduced hours to keep your wages remain the same each month?

HappyMJ

I will be negatively affected as I need to pay more for services provided for me by those earning minimum wage. I won't be earning any more myself as I do not get the minimum wage.

As I will have less disposable income I won't be spending as much money on discretionary expenditure.

Thrugelmir

Less time at work is surely positive. More time with the children. Lower childcare costs. If there's the work to be done employers can offer additional hours and workers will be rewarded.

Asda hit the news recently.

"Asda sees biggest sales fall on record"

http://www.bbc.co.uk/news/business-35604336

Mistermeaner

Need check your maths there. Fewer hours work for same pay. Seems pretty good to me.

Folk being made redundant is tough for them in the short-term but the reason why they were employed on such low pay is that the government was essentially subsidising their life style through in working benefits - if they are good hard working people they will be able to secure employment elsewhere at the new higher min wage so will b better off in long run.

System

We will be affected as a small company employing 10 people.
There are 4 pay scales. All new starters are paid the minimum wage, and after satisfactory probation progress up the scales according to ability, experience, etc.

The new NLW is 10% higher. We can't afford to give everyone a 10% pay rise in order to preserve differentials, so in future we shall reduce staff levels and only have two grades - starters and really skilled people. There will in future be no openings for anyone in between - it will be high skill/output only.

Is this what the government intended - fewer jobs?

chewmylegoff

If everyone is just having their hours cut and so will be no better off in financial terms as the OP seems to think, it is difficult to see how the increase in minimum wage will have an inflationary effect on the price of stuff. Can't have it both ways OP!

michaels

What a surprise, first day economics course, increase the price of something and demand goes down.

I love the same people who complain about 'tax payers subsidising big companies' with tax credits also suggesting that getting the same money for fewer hours makes the policy a success - obviously same pay for fewer hours will have no impact on the tax credits bill....

michaels

chewmylegoff wrote: »

If everyone is just having their hours cut and so will be no better off in financial terms as the OP seems to think, it is difficult to see how the increase in minimum wage will have an inflationary effect on the price of stuff. Can't have it both ways OP!

Head back to the economics class, requiring less labour suggests a reduction in output and why would you expect to sell less unless you thought you would have to increase prices.

Consider a coffee shop, at current labour costs they can afford to sell a cup for £1. Increase the price of labour an they will have to sell cups at 1.05 to cover the costs. They will sell fewer cups at the higher price so will need less labour.

Thrugelmir

michaels wrote: »

Head back to the economics class, requiring less labour suggests a reduction in output

Alternatively view is actually an increase in productivity and efficiency.

michaels

Thrugelmir wrote: »

Alternatively view is actually an increase in productivity and efficiency.

Sure there will be some substitution from labour to capital but if this were costless why wouldn't it have happened already so therefore it will not be enough to offset the increase in labour costs.

Tromking

michaels wrote: »

What a surprise, first day economics course, increase the price of something and demand goes down.

I love the same people who complain about 'tax payers subsidising big companies' with tax credits also suggesting that getting the same money for fewer hours makes the policy a success - obviously same pay for fewer hours will have no impact on the tax credits bill....

What a surprise, private sector companies tailoring their attendance patterns in order to continue the tax payer funded subsidy of their employees....and people drip about the so called inefficient public sector!