[The Economy] 6.2% living wage increase

CreditCardChris

Not sure if this is the correct sub forum to put this in but here goes.

So the government just announced the "biggest cash increase ever" a 6.2% rise to the national living wage and immediately in the Federation of Small Businesses are basically saying they're doomed because they can't afford to pay people a living wage! Well I'm sorry but if your business is so fragile that you cannot afford to pay people a decent wage, then perhaps it's for the best you go bust now rather than later?

Small businesses are saying they're going to have to cut hiring rates, even let some people go, cancel investment plans, lower the quality of training and equipment etc...

So what's the solution here? To keep people on sub par wages forever and ever because your business isn't good enough to pay them what they need to survive?! Seriously I don't get it... What do these small business actually think the solution is here?

After a decade of sub par wages growth we're finally getting our head above water again and straight away you have the doomsdayers crying about being forced to pay people a living wage... Oh the horror, oh the injustice!

Thrugelmir

Have you ever run your own small business?

MaxiRobriguez

There are a lot of businesses whereby their margins are less than 5% and 90% of the staff (which makes up half the business costs) are on minimum wage, which is going to make the business barely profitable.

The inevitable reaction will be to push prices up (at which point the living wage is no longer the living wage), or hire better staff (whole bunch of people who haven't had that 6.2% payrise but are now minimum wagers who are more capable than the staff base already employed).

I tend to agree that businesses should pay the living wage but it is going to hurt some industries and that cannot be ignored. I'd rather see exec pay linked to lowest pay as a means to curtail staff costs at the higher grade rather than the lower.

CreditCardChris

Thrugelmir wrote: »

Have you ever run your own small business?

No, but I understand it's probably tough and there's not much profit for these business owners but that's why I'm asking what do these small business see as the solution?

There seems to be two options, to keep people on low incomes when the price of living and rent continues to rise, or suck it up and find ways to optimise your business.

lisyloo

CreditCardChris wrote: »

No, but I understand it's probably tough and there's not much profit for these business owners but that's why I'm asking what do these small business see as the solution?

There seems to be two options, to keep people on low incomes when the price of living and rent continues to rise, or suck it up and find ways to optimise your business.

Successful people will adapt their businesses.
That might mean automating some tasks, offshoring them or finding cheaper alternatives I.e. less labour.
There are some business that might withstand raising prices and keeping the labour.

But some of the solutions will inevitably mean losing jobs.

I lost my IT job in 2015 as the jobs were gradually offshores to India at about 1/6th of the price.

MaxiRobriguez

CreditCardChris wrote: »

No, but I understand it's probably tough and there's not much profit for these business owners but that's why I'm asking what do these small business see as the solution?

There seems to be two options, to keep people on low incomes when the price of living and rent continues to rise, or suck it up and find ways to optimise your business.

You could target the actual cost of living rather than income.

People on NMW are more likely to be renters. Rent costs are high and landlords for the last 20 years have made a pretty profit from their endeavours. Perhaps rent controls would do more good for these people than bumping their wages and seeing inflation in tow.

CreditCardChris

MaxiRobriguez wrote: »

You could target the actual cost of living rather than income.

People on NMW are more likely to be renters. Rent costs are high and landlords for the last 20 years have made a pretty profit from their endeavours. Perhaps rent controls would do more good for these people than bumping their wages and seeing inflation in tow.

So you mean like introducing a law that prevents home owners from rising the price of rent for x amount of years or whatever? Can governments even do that?

triathlon

Thrugelmir wrote: »

Have you ever run your own small business?

I run a few small businesses and I very much welcome moves like this. I am the first to sound off at the TV and the young adults just destroying and wanting everything at the drop of a hat, but at the same time I understand we need to get that vulnerable kid on the council estate living in poverty and show him the tough but possible path out of there.

Bring it on I say, more of it

lisyloo

CreditCardChris wrote: »

So you mean like introducing a law that prevents home owners from rising the price of rent for x amount of years or whatever? Can governments even do that?

We collectively voted for one that’s very unlikely to do that.
Of course governments can change the law. They would need to get it through the House of Lords, but they change laws all the time.

Rocksolid

I'm not British, but this will work only in one way and for the following reasons.
Everywhere is the same story, they raise the minimum living wage, and alongside house prices and rents plus bills eventually.
Then, you see always the same movie, bosses with Bugatti and the 99% of employees of the big !!! companies working for the minimum, plus properties, tons of shares, even plots on the moon.


Whatever you wanna say about this, let it be, it's a loss of time.

Rocksolid

For the law of the free market, the government can't rule the rent prices, as well as house prices, just the increase can be ruled.