Minimum wage

Mistermeaner

A good thing for hard working families?

A transfer of liability for making benefit payments from the tax payer (via taxes) to the tax payer (via increased cost of consumption)?

A tool to increase unemployment?

An encouragement for more productivity?

A travesty of meddling in free market economics?

michaels

Have to admit I am not in favour being in the 'even a low wage job is better than no job' camp - then again although I have done many jobs for carp money I have always known it to be a temporary situation. Currently I earn NMW and the living wage will cost me money as I will pay more NI.

I notice in France where they make employing people very expensive they have high unemployment, ghettos and a big problem with radicalisation amongst those with no stake in society.

http://www.bbc.co.uk/news/uk-wales-politics-35841258

The claim follows warnings 900,000 UK retail jobs could be lost as a result of pressures facing the industry, including the new minimum wage.

mwpt

I'm not a fan of raising the minimum wage generally. As michaels points out, it can have adverse consequences for the people it is meant to help.

In this case though, we should read between the lines a little and take the context from where it is coming. I have very little doubt that increasing minimum wage does not fit the typical Tory economic view, so we should look for another angle. We have a Tory chancellor trying to reduce the deficit by reducing public spending, while maintaining growth.

Low hanging fruit has been picked. He was unable to cut working tax credits. He is now getting very severe push back on further cuts. What could possibly help to erode the debt and reduce the deficit while maintaining the illusion of current welfare? How about suppressing tax credit payouts while making work more attractive? Or a nice surge in inflation ought to do it. He could go to the printing press, but that could have very unpredictable consequences. But what about stoking inflation by raising the cost of everything through minimum wage? If he can at the same time suppress the value of GBP, meaning the UK remains reasonably competitive, that might generate the additional growth required while reducing debt obligations, and maybe, maybe, the market will let it slip by.

Conspiracy theory? Too obvious?

Mistermeaner

how much does the public sector employ people (directly or indirectly) on the minimum wage?

There was alot of stink about care workers being effected and the increase in costs to councils, for which councils were allowed the privilege of increasing council tax (for tax payers) by 3%

princeofpounds

I don't agree with a minimum wage, but I do think that it is a relatively harmless policy at the sort of levels it is set at, and also has the advantage of making compensation at the lower end of the market a bit more clear than it might otherwise be.


Personally I think what is more important is ensuring that people aren't taxed when that money just has to be handed back to them via benefits. It's just a recipe for insane marginal (indirect) tax rates for low income people returning to work, when it's hard enough to keep marginal tax rates low even on subsistence benefits.


So I think the move to raise the tax free allowance was great, and I think many of the government's moves to constrain benefits have been sensible (though not all).

Thrugelmir

There are sectors of the economy which could be severely impacted, care, tourism /leisure, retail etc. We won't know until 2020 which organisations are going to be most affected. As not just the MW but pension provision as well. If over half your operating costs are employees on low wages then yes, there's a serious impact. Particularly is there's no ability to pass costs on to your customers. Depending on the size of business VAT also becomes an issue for some. As this too will be added on top of the cost to the end user.

Conrad

I'd love to be a fly on the wall as some lefties shop around in Homebase for best value screws and tools, made in China, not a thought in their mind for improving British workers lot by buying British.


Do you ever see Moneysaving alerts along the lines "£grabbit now, not the cheapest, but this firm pays decent wages".......

Conrad

Thrugelmir wrote: »

There are sectors of the economy which could be severely impacted, care, tourism /leisure, retail etc. We won't know until 2020 which organisations are going to be most affected. As not just the MW but pension provision as well. If over half your operating costs are employees on low wages then yes, there's a serious impact. Particularly is there's no ability to pass costs on to your customers. Depending on the size of business VAT also becomes an issue for some. As this too will be added on top of the cost to the end user.

I notice the same voices that call for longer paternity rights and higher pay for British workers can then be found on various moneysaving threads effectively not supporting British workers, their only aim to bag a low price.


It's this total lack of joining the dots that tickles me

Thrugelmir

Conrad wrote: »

I notice the same voices that call for longer paternity rights and higher pay for British workers can then be found on various moneysaving threads effectively not supporting British workers, their only aim to bag a low price.


It's this total lack of joining the dots that tickles me

An educated guess is that this was GO's way of exiting "Brown's welfare state". Transfer the liability from the Treasury to business. Once achieved then the MW can be left to stagnate. If business finds the levels unaffordable. Or make exemption for particular trades or vocations.

HornetSaver

The sectors I can think of where the planned increases in the minimum wage are likely to be a game-changer are:

* Retail - where yes, wages rises will be passed on to the consumer. But the more you consume, the more you would pay. If the goal of the minimum wage is to eliminate the need for in work benefits, I would have thought the OP would approve of this compared to a tax/benefits system where the more you contribute to the benefits system, the less you are likely to be eligible for from it.

* Care workers - decisions on provision for those unable to provide for themselves is the responsibility of government (what decisions they choose to make depend on factors such as ideology and resources - they might take the decision that everyone knows they will get old and should therefore fend for themselves). Privatisation can be a good thing, as it provides an incentive to drive down costs and compete on quality, but ultimately it's for government to decide if or how it will subsidize or support providers unable to break even. This is an example of the government taking with one hand only to have to give the same amount out with another, however a bad fit for one sector does not make the wider policy invalid.

*Cleaning - it's not the government's fault that generation X started the trend of people forgetting how to run a hoover, mop floors, wash up and scrub toilets. If businesses choose to continue to contract out cleaning, it is because even at the higher wages paying someone else to do it is still more cost effective than having a cleaning rota among their existing staff.

*Farming - there's plenty of profit margin to share around from the production, distribution and sale of British produce, which generally attracts a price premium compared to like-for-like imports. That one end of the chain hoards almost all of the margin is a problem that would exist regardless of how much farm workers were paid.

*Small-scale manufacturing - normally a conscious decision is taken that for some elements labour is more cost-effective or reliable than automation, thus preventing investments that might improve productivity. I don't think the minimum wage, or indeed increases to it, will have any detrimental effect on the sector - the question is whether the number of jobs will fall as people are replaced by machines, or be maintained because more efficient decisions are taken and, combined with falling business tax rates, Britain is a more attractive place to locate manufacturing compared to its neighbours.

chewmylegoff

michaels wrote: »

Have to admit I am not in favour being in the 'even a low wage job is better than no job' camp - then again although I have done many jobs for carp money I have always known it to be a temporary situation. Currently I earn NMW and the living wage will cost me money as I will pay more NI.

I notice in France where they make employing people very expensive they have high unemployment, ghettos and a big problem with radicalisation amongst those with no stake in society.

http://www.bbc.co.uk/news/uk-wales-politics-35841258

Whatever social and unemployment problems the French have don't seem to me to be obviously linked to the rate of their minimum wage which is similar to that in Germany and lower than both Australia and New Zealand. Indeed the minimum wage in France is not materially higher than it is in the UK now.