Should the National Minimum Wage be frozen?

DanMartin · Dec 29, 2008

The British Chambers of Commerce today called for the National Minimum Wage to be kept at current levels in 2009. Otherwise, the BCC said, hard pressed business owners will be forced to shed jobs amid the economic downturn. But do you agree? Should minimum wage levels be frozen? Vote in the poll above.

SLF · Dec 29, 2008

I think those business owners wanting the nmw frozen should declare their own personal income on the ballot slip, just to justify their point.

robokoder · Dec 29, 2008

Statutory minimum wages *always* cause unemployment, because they leave a gap between labour offered at the minimum wage (as it gets higher this increases) and labour demanded at the minimum wage (as it gets higher this decreases). The difference between the workers offering and the workers being demanded? Unemployment.

If it really is true that there is a basic wage below which people cannot survive, then the market will determine it (it will be the wage below which no rational worker would bother to work). You can influence this by setting jobseekers' allowance higher (so people have other options than working £1 ph). This is the way to deal with low wages, NOT market-destroying minimum wages.

Subbynet · Dec 29, 2008

Shouldn't it be linked directly to the rate of inflation?

Dec 29, 2008

I suspect a more interesting question might be how many members work for the minimum wage.?

Earl

Subbynet · Dec 29, 2008

sirearl said:
I suspect a more interesting question might be how many members work for the minimum wage.?

Earl

Given this is a business forum, and that many here are ever Self-Employed, Directors, or Investors, I'd assume not many.

Dec 29, 2008

Oh in that case I suspect they may not be qualified to discuss living on the minimum wage.?

Maybe one should ask pensioners.

Earl

sjt · Dec 29, 2008

sirearl said:
I suspect a more interesting question might be how many members work for the minimum wage.?

Earl

HERE...

(although I earn over the NMW, but this takes into account 'holiday pay')

I'm officially a 'casual worker', and doing this while applying for jobs/setting up in business.....

Dec 29, 2008

sjt said:
HERE...

(although I earn over the NMW, but this takes into account 'holiday pay')

I'm officially a 'casual worker', and doing this while applying for jobs/setting up in business.....

No need to ask how you voted.

Don't ya just love the hypocrisy of the human race.

Don't worry there will be a hundred reasons for keeping TMW as is.

But really there's only one.

Earl

nateski · Dec 29, 2008

yes and the reality is so should the number of annual leave days which are set to increase this year by two days, the government seems to forget the difference between big and small business and sees business as one entity - it isnt like that, i know people who own and run small businesses that earn less than everyone in there company and work twice as hard, minimum wage or etc annual leave doesnt apply to them, they get no extra tax breaks or benefits - the members of this government should be forced to try and run a start up or small business for two years then go back to fantasy land politics!

Kaos · Dec 30, 2008

sirearl said:
I suspect a more interesting question might be how many members work for the minimum wage.?

Earl

Im currently about 3p over NMW of £4.74 odd.

Yes im young, but bugger me after fuel and natural expenses i currently get away with about £100 a month pocket money.

hence me moving to more self employment with my skills! funny fact is if i moved the 250 odd miles t'up north i'd be on £8 an hour doing the same stuff i do now( warehouse)

Tom McClelland · Dec 30, 2008

The government (of all persuasions) gets involved, in all kinds of things where its presence just acts as a needless drag on personal responsibility.

NMW is one of those areas. A contract of employment is an entirely voluntary act between consenting adults. The hourly pay associated with that doesn't need any legislation at all.

NMW is doubly ridiculous, set as it is, well *below* the level at which the government starts taking 30% of our mariginal income (assuming a 37.5 hour week). So, it is the minimum that we're supposed to be able to earn, but the government takes a slice of it for itself. That makes sense, doesn't it.

So the NMW shouldn't be frozen, it should be abolished, along with much else that is on our statute books.

Kaos · Dec 30, 2008

But tom if we abolished it, there would be problems, people like me still working full time at the bottom end would probably see my wage go down! and if that happened i would definitly loose my job as it would be come un econimcal to drive to work i do 30 miles a day! that would porbably cut my £100 spendies to about £20! so there should be abottom line Minimum for all age groups i reckon say £5.00 an hour for every age group other wise we'd probably see more unemployment.

seasonsonline · Dec 30, 2008

I'm not an expert on this matter, but surely freezing the min. wage isn't going to solve our desperate economic situation?? - To me, freezing it would be like making the poor poorer and would kind of add to our problems.

We should be starting at the top of the economic ladder, re-structuring and streamlining businesses to work more efficiently with even tighter legislation. It just seems that the divide between rich and poor is ever expanding, and this needs to be closed a bit if things are really going to improve.

Matt1959 · Dec 30, 2008

dont anyone forget that the minimum wage is almost an irrelevance to many on low wages with families, as the CTC tops your income up by a huge amount and thats tax free as well!

Personally I see the minimum wage causing potential problems for employers as it forces up the wages of everyone else in turn, in order to to maintain the differential in earnings.

matt.chatterley · Dec 30, 2008

Playing devils advocate for a moment, I suspect the argument FOR freezing is to slow inflation - which at first glance seems obvious. Here in Jersey, the minimum wage is higher than on the mainland, and there is a proposal going through at the moment to increase it quite a bit - clearly not going to help the small businesses through the post-christmas lull!

However, the counter-arguments that this will impact on the lower-earners yet again (thanks, Gordon!) is valid as well - and surely if people are (slightly) worse off, consumer spending will drop - essentially either way it will feed one of the negative cycles!

As seasons says above - aren't there bigger fish to fry?

seasonsonline · Dec 30, 2008

Matt1959 said:
dont anyone forget that the minimum wage is almost an irrelevance to many on low wages with families, as the CTC tops your income up by a huge amount and thats tax free as well!

Personally I see the minimum wage causing potential problems for employers as it forces up the wages of everyone else in turn, in order to to maintain the differential in earnings.

From a totally economic point of view (disregarding individuals circumstances), your point about tax credits to low earners is valid, but it will not help our country climb out of this lull, as any extra money paid out from revenue & customs to low earning families will still have an adverse effect on our economy.

My initial reaction to the question "Should min wage be frozen" was "YES", but the more I think about it the more I think "NO". Start higher up.- The government should come up with an emergency plan for the next 2 years, and scoop some money from other areas. Big supermarkets would be my first choice!!

Philip Hoyle · Dec 30, 2008

Surely keeping people in jobs and encouraging firms to take on more employees is better for the economy? Surely it is better for more people to be employed earning at 2008 levels than less people being employed at a few percentage points higher wage. By all means increase NMW, but at the same time, reduce corporation tax or employers NIC to compensate. It is not clever to increase a firm's overheads at a time they are struggling to survive.

Dec 30, 2008

Might be an idea to have a freeze on maximum wages.

Oh no I hear cry that would smother innovation and the desire to succeed for our top people,even to the point where such majestic institutions as banks and other major players go broke.

Of course non of this applies to the serfs on the minimum wage who for some strange reason seem to be mostly employed in essential occupations unlike there master banker cousins.

Earl

Tom McClelland · Dec 30, 2008

Kaos said:
But tom if we abolished it, there would be problems, people like me still working full time at the bottom end would probably see my wage go down! and if that happened i would definitly loose my job as it would be come un econimcal to drive to work i do 30 miles a day! that would porbably cut my £100 spendies to about £20! so there should be abottom line Minimum for all age groups i reckon say £5.00 an hour for every age group other wise we'd probably see more unemployment.

You're doing 30 miles a day commuting to get to a minimum wage job? That is exactly the kind of nonsense economic distortion generated by the minimum wage that I'd love to see disappear. Let's suppose that your boss could get someone local to do your job for less money (and the local employee would end up with more money in his pocket because of the absence of travel costs)... since if he couldn't then the minimum wage is irrelevant to your situation. Effectively you're keeping that person out of a job, and the minimum wage is subsidising your costs to travel to and from work. So in the situation you describe the minimum wage is fuelling carbon wastage....

To suggest that eliminating the minimum wage would *increase* unemployment locates you in a different place from planet reality. Reducing the cost of employing people inevitably makes more work available. You personally would be better off in your pocket with a lower wage closer to home and lower travel costs, but the minimum wage legislation insanely makes it illegal for you to strike such a deal with an employer, despite such a deal benefiting both you and an employer closer to your home.

The government has no business getting involved in private contracts between employers and employees. All economic gains that are supposed to accrue from such interference turn out to be illusory when examined more closely.

Chris Ashdown · Dec 30, 2008

I would get rid of the minimum wage but make a limit on the highest earner in any company only being piad about 12-15 times the pay of the lowest employee, a good incentive to take everybody up with the success of the company

Alison Jones · Dec 30, 2008

It would be a good idea to freeze the national minimum wage until the economy improves. If businesses can afford to continue their member of staff at the current NMW but not if the increase happens then that member of staff is better off being paid current NMW then being made redundant and living on benefits.

With the rise of NMW those members of staff with more responsibility who were on a little more then the NMW if the NMW increases then most of the time those with more responsibility will expect a pay rise too.

Esk247 · Dec 31, 2008

there should be a cap on the silly wages earned by footballers and the silly wages commanded by so called executives who merely turn up at a meeting once a month and get a nice big fat bonus from it....the amount that some people earn is astonishing considering the little work they do...one person i know earns £60k a year and all he's ever done since the age of 18 was work for his dads company, he's written off 3 top of the range sports cars and travels all over the world, but doesn't do a bloody thing...he's a Co-Ordinator apparently but has yet to actually co-ordinate anything.

frustrates me when so many people on here work hard or have worked hard to achieve what they have.

you cannot abolish the minimum wage due to the fact that if you do...many businesses will simply bring in millions of foreign workers who are quite prepared to work for £1.50 per hour and quite prepared to live 5 to a single room. there needs to be some kind of stable platform.

graemepirie · Dec 31, 2008

I agree with a "maximum" wage. Not a number as such but by higher tax bands. I'm referring here to the absolutely silly wages that some receive, way above the 150K labour are proposing to tackle. For example I see nothing wrong with 90% tax over £1M per year.

As for the minimum wage, I prefer to let the market take care of this. In times of good levels of employment, wages go up naturaly as employment increases & down as unemployment increases. Surely this is sensible?

If we are to have a minimum wage then there are other things that should be taken into account - for example the state pension & tax thresholds. I can see no justification (from a "fairness" point of view) for taxing people above £2.61 per hour - as they do currently.

Simon-M · Dec 31, 2008

graemepirie said:
For example I see nothing wrong with 90% tax over £1M per year.

People earning this kind of bunce are not stupid enough to get caught in the tax trap. High earners always have more options for avoiding tax. They can afford it

Dawg · Dec 31, 2008

Simon-M said:
People earning this kind of bunce are not stupid enough to get caught in the tax trap. High earners always have more options for avoiding tax. They can afford it

As someone said after the last financial statement: people below £150k will pay more tax, those over £150k will pay more accountants.

As to taxing people who earn below the minimum wage: sheer drooling madness. Some of those people probably get benefits of one sort or another too; how much is the administrative cost of all this?

(On high pay, an aside: did you know that the whole board of Honda earn less than the annual bonus of the CEO of GM? Remind me, which one is the successful car maker?)

graemepirie · Dec 31, 2008

Dawg said:
As someone said after the last financial statement: people below £150k will pay more tax, those over £150k will pay more accountants.

As to taxing people who earn below the minimum wage: sheer drooling madness. Some of those people probably get benefits of one sort or another too; how much is the administrative cost of all this?

(On high pay, an aside: did you know that the whole board of Honda earn less than the annual bonus of the CEO of GM? Remind me, which one is the successful car maker?)

Completely agree, that's why we also need to throw away 9,999 pages of the tax legislation & move to a simple flat tax on income.

Tom McClelland · Dec 31, 2008

Esk247 said:
there should be a cap on the silly wages earned by footballers

Be careful what you carelessly wish for.

Whether you enjoy it or not, professional club football is one of this countries most successful industries. It generates large amounts of internal economic activity, and is a giant export market for us. People watch English premiership football on TV all over the world. The income generated is gigantic and all that money has to go somewhere. The best players are very rare individuals, and they are free agents (sadly for your proposition) able to negotiate the best deal that they can, anywhere in the world. Their ability is on show for all to see in an environment where success and failure are precisely measured. If the UK were turned into the socialist utopia that you'd presumably welcome the top 500 players would merely go elsewhere in the world, instantly, unless you propose an iron curtain too. No measure could be proposed that would more certainly and completely destroy the value of a large and profitable UK industry than an arbitrary cap on professional football player wages. They all pay PAYE on their large salaries and the TV companies and football clubs are likewise big contributors to the exchequer. I look forward to your plans to make up the shortfall from C Ronaldo's salary alone. No-one is forced to buy an Old Trafford season ticket or a Sky Sports subscription with a gun to their head.

Esk247 said:
and the silly wages commanded by so called executives who merely turn up at a meeting once a month and get a nice big fat bonus from it....the amount that some people earn is astonishing considering the little work they do...one person i know earns £60k a year and all he's ever done since the age of 18 was work for his dads company, he's written off 3 top of the range sports cars and travels all over the world, but doesn't do a bloody thing...he's a Co-Ordinator apparently but has yet to actually co-ordinate anything.

These are private arrangements made between consenting adults. What exactly is your proposal? That parents shouldn't be able to give money or jobs to their children? Maybe the lad is poor value. Maybe some nonexecs are also poor value. That is a matter for their employers.

Esk247 said:
frustrates me when so many people on here work hard or have worked hard to achieve what they have.

What has that got to do with anything? Envy is a useless drain on clear thinking. Demonstrably the countries in the world that are wealthy and successful are also the countries with freedom of contract, freedom of capital. There appears to be a direct correlation between economic freedom to strike whatever deals we find agreeable and the wealth of nations. It beggars my belief that so many people on an internet board that is all about entrepreneurship and enterprise should want to *increase* the amount of state interference and regulation in this country.

Esk247 said:
you cannot abolish the minimum wage due to the fact that if you do...many businesses will simply bring in millions of foreign workers who are quite prepared to work for £1.50 per hour and quite prepared to live 5 to a single room. there needs to be some kind of stable platform.

There are already separate regulations about non EU workers coming here and "taking our jobs". But never forget, we're in a global market, and many UK businesses are competing with employers paying £1.50/hour to people leaving in conditions that we'd regard as poor. And those workers are very glad to have that work. It is better than what they'd otherwise be doing.

matt.chatterley · Dec 31, 2008

graemepirie said:
Completely agree, that's why we also need to throw away 9,999 pages of the tax legislation & move to a simple flat tax on income.

Here in Jersey, there is only one income band for tax - everyone pays the same. The system is being further rationalised at present, essentially eliminating the notion of allowances - further simplifying the calculation.

The annual return form is frankly a dream compared to the UK self-assessment return, although on balance for middle-earners, the amount of tax paid is not that different - making the system far more "profitable" to administrate!

Was it in one of Pratchett's discworld books where Taxation is compared to Dairy farming - extracting the maximum milk with minimum mooing?

glennmid101 · Dec 31, 2008

Well if we are going down the road, we should freeze exec pay, and Mp's pay, but i don't see the clamour for that strangely enough.

If low pay is going to be the route for workers, then people will happily not work, simple as that.

Also the genuises forget to tell us that the govenrment will end up picking the tab, with having the increase benefits, for people are working. So do we really want to increase governing spending?

The freeze is another gimmick, which is more to do with fighting the battles of the past.

When you get idiots yapping on about how miniumum wage destroys jobs, can someone explain to me about all those people who where thrown on the scrapheap in the 80s, when we didnt have a minimum wage?

I take it people are hankering a return to the good old days of 4 million people unemployed, where training schemes designed purely to keep the unemployed total down.

If we are genuinely serious about this recession, we should be looking at scraping natiional insurance contributions from employers. To me it is a tax on jobs, pure and simple.

Philip Hoyle · Dec 31, 2008

I see this thread has been hijacked by the usual suspects - i.e. ones who hate private businesses by going on and on about high pay for the bosses. Reality check - it is a VERY small number of businesses who pay their bosses silly amounts of money. Yes, they should be criticised, but you can't tar everyone with the same brush.

A staggering 95% of businesses employ less than 5 people. I'd say few, if any, of those business owners will be raking in hundreds of thousands of pounds a year. Most business owners will be earning around the average wage - the last official statistics I saw showed self employed average earnings actually less than employed average earnings.

Small firms employ more than 58 per cent of private sector workforce and 13.5 million people work in small firms.

So, you can actually forget about the fat cats earning huge bonuses when you talk about small business. The fact is that most small business owners will not even be higher rate taxpayers, yet alone fat cats. Many business owners earn less than their employees. Many business owners actually put more money into their business than they take out just to keep it afloat, especially in these hard times.

There are 4.7 million small businesses in the UK. If government incentivised them to take on more staff, i.e. by scrapping or reducing employers NIC or giving small employers other forms of support, then it is easy to see that you could virtually eliminate current levels of unemployment, even if only 1 in 4 business took on an employee, or if half took on a part-timer.

Most of those 4.7 million small businesses will be having a hard time at the moment. Increases in NMW without any corresponding govt help are likely to result in redundancies and business failures.

I'm all for criticising the big firms that abuse the system and overpay their top staff, but that is the minority. Small business is on a knife edge and need help. What do the government do - increase NMW, increase employers NIC, introduce compulsory employers pension contributions - they havn't a clue what life is like at the sharp end of small business.

graemepirie · Dec 31, 2008

I don't think it's a case of hijacking, I think people have different views of "high pay". I did say I'd be in favour of some form of pay capping for extreme pay. By this I mean the extreme examples - people earnings millions per year I'd put in this category.

NO-ONE is worth that amount of money & there's also no chance that they'll go elsewhere if they weren't paid obscene amounts of money. Take for example Jonathan Ross - what possible reason is there for him being paid £6M per year? What would happen if he was told he's going to be taxed 90% above a million? Who would care if he left? Who would be daft enough to pay him that much except for a public corporation? I'd also agree with the footballer comments (although I accept their earning lifespan is relatively short).

This is NOT to say that I have any objections to those earning 250K or 500K. The question is how much is enough, there has to be a limit somewhere. It's completely wrong that there are so many loopholes in the tax system allowing those who can pay an accountant to avoid taxes.

But back to the point - employers NI is without a doubt a disincentive to employ people. I'd go further than scrapping it, employers should be able to keep a proportion of the employees NI as payment for all the tax collection work we have to do.

Tom McClelland · Dec 31, 2008

By all means cap the pay of people earning millions a year. Or tax them at 90%. Competitors all over the world would be delighted to see the UK destroy its extremely successful music, TV, film, and sport industries. You may not think that a premiership footballer is worth the money he is paid, but the people who actually pay his wages, who own the clubs, disagree. Likewise the executives of record companies who pay vast sums to successful performers.

I've no idea what J Ross is worth. Personally I dislike the man. However I do know that private media companies all over the world pay successful stars/artists many times Ross's salary.

Once again. No-one downloads a Madonna track because they've a gun to their head. No-one buys an Old Trafford season ticket or a Sky Sports subscription because they've a gun to their head. No-one watches or listens to Jonathan Ross because they've got a gun to their head.

Dawg · Dec 31, 2008

Overall, as a percentage of the economy, the amount paid/overpaid to very high earning individuals is minimal. The money is also spread by taxation and investment, the second of which creates value. There is room to argue that the extremely high rewards of some in business represent a market distortion rather than the 'economic rent' paid to people like footballers and film stars. Again it's not that big a deal except to the Envy Brothers. As said above, it is more important as a symbol of a vibrant economic culture where it is possible to amass wealth without being a politician.
The minimum wage has not been shown to cause the loss of jobs in the UK in the last decade. It has however been shown to cause the loss of overtime in low paid jobs, where, like it or not, overtime can be necessary for economic wellbeing. I'd imagine that the recession will make this far more pronounced: basically the poorly paid will be hurt most by a rise in the minimum wage.

Another aside: The three year £18m contract for Jonathan Ross was not £6m a year for him. It was a contract awarded to his production company to produce the programmes he is seen in on the BBC over those three years. It is not an unusual or amazingly generous contract for a production company to land, a good one yes, but not a funny money one. A lot of other wages are paid from it. The reporting of it is just more spewling from the blather monkeys in the tabloids.

Dec 31, 2008

I suspect a much more relevant point is that 2% of the population own 50% of the wealth.

This fact impinges on all areas of society's.

Earl

Philip Hoyle · Dec 31, 2008

sirearl said:
I suspect a much more relevant point is that 2% of the population own 50% of the wealth.

This fact impinges on all areas of society's.

Earl

OK, so find ways of hitting that 2% that you clearly envy. A blanket hit against every employer is a blunt instrument and will hit equally against both the rich and poor employers. It will actually make things worse as those 2% richest will be in the best position to afford higher employer costs so they and their staff will barely be affected at all - the remaining employers and their employees (by and far the vast majority) are already "poorer" than the top 2% and will be made worse off accordingly either by loss of their jobs or loss of business profits.

Surely, with all the alleged wisdom in government and socialist circles, they can come up with a fair way of protecting those lower earners (employees AND employers) by extracting more out of the top earners (employees and employers)!

Dec 31, 2008

Philip Hoyle said:
OK, so find ways of hitting that 2% that you clearly envy.

Surely, with all the alleged wisdom in government and socialist circles, they can come up with a fair way of protecting those lower earners (employees AND employers) by extracting more out of the top earners (employees and employers)!

I envy no man,but can see the injustice in the current system.

Although it would be nice to be 20 years younger.

As for your second statement.

Ain't happened in the last billion years,so why do you think it could happen now.

Earl

matt.chatterley · Dec 31, 2008

sirearl said:
I suspect a much more relevant point is that 2% of the population own 50% of the wealth.

This fact impinges on all areas of society's.

Earl

Heh. True. Thats why some of us focus on madcap ways to get into that 2%.

Surely this would be a good time for the government to look inwards - reduce costs - improve efficiency - finally bring the hammer down hard on benefit fraud - and so forth.

All more effective than fiddling about with popularity winners (or losers) like minimum wage?

Tom McClelland · Dec 31, 2008

Getting into that 2% (that some would like to be forcibly made poorer, to the presumed but unproven benefit of the other 98%) isn't particularly difficult if you have any kind of merchantable skill and/or you're prepared to work hard in a focused goal-seeking way. Indeed it is a certainty that many/most of the posters to UKBF are in that 2% of the population. After all we're talking about more than 1,000,000 people in that 2% in the UK alone.

Certainly most of the top 2% aren't professional sportsmen, captains of industry, city slickers, or entertainers. Most of them are normal working professionals and owner-managers of small businesses who've been a little more successful than the norm (and no, please don't fill the thread with denials of personal wealth. They aren't interesting)

graemepirie · Dec 31, 2008

The richest 1000 are worth 412B (that's 30% of GDP) & up from 99B when labour came to power. Is that right/fair?

Should the National Minimum Wage be frozen?

Should the National Minimum Wage be frozen?

Yes

No

Kaos

Kaos

matt.chatterley

Esk247

graemepirie

Simon-M

Dawg

graemepirie

matt.chatterley

glennmid101

graemepirie

Dawg

matt.chatterley

graemepirie

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