[The Economy] 6.2% living wage increase

HAMISH_MCTAVISH

dharm999 wrote: »

Or a company operating in a sector that has low profit margins, not every sector is high wage, high profit. We operate in a low margin, low wage sector, with wage cost around £40m a year, and we make c2% pre tax profit margin. The increase in minimum wage will mean our profit drops to zero, unless we pass it on to our clients, which is what we will do. Clients will push back, and some will want to reduce the service they want, which will mean having less people employed, as employment costs are 85% of our total costs. That's the reality of the sector we operate in, it's our choice, but for people to say we pay poverty wages, or we should be paying more, what planet do they live on? We would love to pay £10 an hour, but clients won't pay what that would cost them. The sector has very few barriers to entry, so any cowboy can set up, and try to undercut their competitors, but it's not sustainable long term.

At the end of the day, our clients will pay for the increase, which will then mean they pass that on to their clients, and eventually we see higher inflation, to some degree. As long as people understand this, and are happy to pay more, by way of higher council tax, or higher prices for goods and services, then the actual size of the increase is irrelevant. Those people who think that companies can just pay this and not pass the this on, do not understand the reality of low wage, low margin companies. There are lots of sectors like this, and they will always be like that.

Spot on.

It's quite ironic that we're on a Money Saving website which has encouraged the population to shop as cheaply as possible for everything, and yet some people still don't seem to understand that consumers want things cheaply, so businesses have to provide things at incredibly low margins and keep costs to a minimum if they're to remain viable.

The arrogance shown by some posters who clearly do not have the foggiest idea of the reality of running businesses is just mind boggling.

spadoosh

dharm999 wrote: »

Or a company operating in a sector that has low profit margins, not every sector is high wage, high profit. We operate in a low margin, low wage sector, with wage cost around £40m a year, and we make c2% pre tax profit margin. The increase in minimum wage will mean our profit drops to zero, unless we pass it on to our clients, which is what we will do. Clients will push back, and some will want to reduce the service they want, which will mean having less people employed, as employment costs are 85% of our total costs. That's the reality of the sector we operate in, it's our choice, but for people to say we pay poverty wages, or we should be paying more, what planet do they live on? We would love to pay £10 an hour, but clients won't pay what that would cost them. The sector has very few barriers to entry, so any cowboy can set up, and try to undercut their competitors, but it's not sustainable long term.

At the end of the day, our clients will pay for the increase, which will then mean they pass that on to their clients, and eventually we see higher inflation, to some degree. As long as people understand this, and are happy to pay more, by way of higher council tax, or higher prices for goods and services, then the actual size of the increase is irrelevant. Those people who think that companies can just pay this and not pass the this on, do not understand the reality of low wage, low margin companies. There are lots of sectors like this, and they will always be like that.

The care sector being a massive one.

So minimum wage increase... yay!

Youll need to increase your priavte payment or pay more in tax to give those workers their increase.

So the question is never do these companies have the money, they are simply a middle man wanting to take a cut, the question is, do you have the money to pay for these pay rises?

Thrugelmir

spadoosh wrote: »

The care sector being a massive one.

So minimum wage increase... yay!

Youll need to increase your priavte payment or pay more in tax to give those workers their increase.

So the question is never do these companies have the money, they are simply a middle man wanting to take a cut, the question is, do you have the money to pay for these pay rises?

Perhaps this one part of a broader range of measures that's in the pipeline. For example lowering business rates for certain sectors, on the size of premises etc could be an offset of the some of the burden. The implications of the proposal would have been fully considered.

SpiderLegs

Ha ha ha Hamish is complaining that he has to collect VAT and then trying to pass it off as a business expense.

So this 2m quid is of utter irrelevance to his company’s ability to fork out an extra 60k to his miserable, downtrodden staff.
Which makes me wonder why he even brought it into the conversation in the first place. Could it be that it’s just the usual attempt at misdirection? Surely not for that would be too low for Aberdeen’s 3rd place businessman of the year 1987.

HAMISH_MCTAVISH

SpiderLegs wrote: »

Ha ha ha Hamish is complaining that he has to collect VAT and then trying to pass it off as a business expense.

So this 2m quid is of utter irrelevance to his company’s ability to fork out an extra 60k to his miserable, downtrodden staff.
Which makes me wonder why he even brought it into the conversation in the first place. Could it be that it’s just the usual attempt at misdirection? Surely not for that would be too low for Aberdeen’s 3rd place businessman of the year 1987.

LOL again.

It's pretty clear you don't have the foggiest idea about business and taxation...

Your false claim was that any company paying millions in tax can afford wage rises.

I've shown you an example of a large UK company with 43% of turnover going directly to government in various forms of taxation, regardless of profitability, and that makes only 4% profit.

Another poster has given the example of 2% net profits.

When such high proportions of turnover go to government directly in taxation, and so many companies are only making low single digit profits, there's simply no room left to raise wages without raising prices.

Perhaps you should stop with the petty insults and actually try to learn a bit about topics before debating them....:money:

spadoosh

Thrugelmir wrote: »

Perhaps this one part of a broader range of measures that's in the pipeline. For example lowering business rates for certain sectors, on the size of premises etc could be an offset of the some of the burden. The implications of the proposal would have been fully considered.

Youve got more faith than I.

Im quite sad and am in to resilience planning etc. Governments very very rarely are proactive, for the vast majority of things its a reactionary function. Its a fundamental flaw, it has to react as such will always be late to the party where as business can be proactive and react immediately.

I can show you lots of situations where the government has not fully considered proposals and their implications.

What mightve have been fully considered is the ability to be able to deliver this and the potential ramifications on votes. What im confident will not have been considered is every aspect of the economy in relation to this.

I suspect the government have taken the approach of businesses dont vote, people do. The OP clearly displays this by thinking the business are going to pay for it not realising that whatever the business does, has just gone up in price along with everything else in the economy and as such ruled out any benefits of a pay increase.

As mentioned, NMW has increased 62% in my working life. My real wage increase is close to 0%. So back when i started work you got paid £5.05 on minimum wage. You now get paid £8.21. They buy exactly the same amount of stuff. This isnt played out better anywhere than in the price of a freddo. In 2005 on minimum wage you could buy 50 and a half freddos for an hours work. In 2019 on minimum wage you can buy just 32.84 freddos. Yet were earning £3.16 more than we where. Id be all for a minimum wage if the result was an extra 32 freddos, its not though, were getting nearly 18 less. Its hard to think from that there was much considering going on, other than a political party determining where to garner votes.

Arklight

HAMISH_MCTAVISH wrote: »

Not at all.

I'm suggesting these jobs are necessary and need to be done, but as just 15% of the population work at them they are also in most cases considered 'entry level', or part time as a 2nd source of income for a family, or older people supplementing other income, or whatever.

Very few people work their whole careers in minimum wage jobs.



As already noted, around 85% of people earn more than the minimum.

And the small number on minimum wage are mostly young, single, students, part timers, etc.

It's not really 'poverty pay'. It's 'foot in the door' pay while they're young and carefree with low costs of living, or learn work skills and get experience to move onto something else.

I think you're being somewhat wilfully disingenuous here Hamish. A living wage is considered to be about £10 an hour. Assuming you manage to get a proper permanent job doing this where you're paid for 52 weeks of the year, that's a princely £19k.

In fact, according to the ONS, about 40% of workers earn less than this. I don't think all of them are likely to be students and retired people passing the time.

Never mind £8.65. Can you get by on £19k a year? In reality most of these workers will be claiming at least some in work benefits due to their low wages, so clearly UK plc is finding extra money from somewhere.

Since you mentioned Greggs, maybe people would have to pay a bit more for their sausage rolls. Perhaps Greggs night redistribute it's own salaries a bit. Considering the CEO of Greggs alone earned £2m last year, or to put it another way, earns 130 times per hour more than the people in his stores, maybe he and the board of directors could take a bit of a cut.

I personally don't think the state should subsidise low wages.

Thrugelmir

spadoosh wrote: »

Youve got more faith than I.

I'm expecting an interesting first budget. With some major initiatives to set the tone for the future. If you don't try you'll never succeed. Doing nothing is not an option for the new administration.

GreatApe

CreditCardChris wrote: »

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!

You sound like a child

What you don't understand is that wealth comes from productivity not from just paying people more or by protesting or forming unions

If you think businesses just need to pay people more why do you think poor middle and rich countries exist?

Are people in Somalia dirt poor because their business men are paying them low wages or is Somalia dirt poor because their nation their businesses and their workers are very low productivity??


Also the great thing about free market capatilism is that there is a large degree of freedom
This means more often than not, businesses can't screw the public or their workers.
If business A underpays their workers then the workers are free to move to business B
If business B underlays their workers the workers are free to open their own business or work as self employed People

The simple reality is that if you are in a low wage sector you are not going to become rich protesting for a few pennies more. You need to get off your backside and train for higher wage jobs and sectors or start your own businesses.

Stop being the kid crying for more pocket money
Take charge of your own destiny

Arklight

GreatApe wrote: »

You sound like a child

What you don't understand is that wealth comes from productivity not from just paying people more or by protesting or forming unions

If you think businesses just need to pay people more why do you think poor middle and rich countries exist?

Are people in Somalia dirt poor because their business men are paying them low wages or is Somalia dirt poor because their nation their businesses and their workers are very low productivity??


Also the great thing about free market capatilism is that there is a large degree of freedom
This means more often than not, businesses can't screw the public or their workers.
If business A underpays their workers then the workers are free to move to business B
If business B underlays their workers the workers are free to open their own business or work as self employed People

The simple reality is that if you are in a low wage sector you are not going to become rich protesting for a few pennies more. You need to get off your backside and train for higher wage jobs and sectors or start your own businesses.

Stop being the kid crying for more pocket money
Take charge of your own destiny

Excellent, I'm going to open a bank tomorrow. Oh, wait...