National Living Wage - issues

[Talay]

Next month we see the NLW rise to £8.21 from £7.83 which is a 4.9% increase and a significant step on the road to £9 per hour by 2020 mooted some years ago.

I want to ask what impact this is having and to share a little of how it is going to affect some of my businesses.

I have a few smaller businesses which do have staff on NLW but a much larger one where we have historically kept wages above the NLW, even if not hugely above. The bottom wage currently is £8.00 per hour.

However, as the NLW rises well above inflation and now includes a significant number of jobs that are simply are not worth £8.21 an hour and would never command that in a free market, I find myself loathe to keep raising wages above NLW and am contemplating letting this rise be limited to the new £8.21 NLW.

Then there is the knock on effect. We have a number of people on £8.25, £8.50, £8.75 and £9.00 and even as late as Friday evening I was asked by someone currently on £10.00 that he thought he should have a decent wage increase of a "few pounds an hour". A lot of this is being brought on by rises in the NLW and I find that we cannot just keep raising everyone's salary when the NLW moves upwards.

Of course, we have to have a margin over NLW for some grades but keeping that margin is hard and in this economy, there are no money trees growing to help retail.

 

[Mr D]

Well on a personal note my wife will be going onto the wage, after several years of earning more than the minimum.
Her 30p a week pay rise gross won't pay for any pension payment increase....

Over time as its increases tend to be bigger than most other pay rises its pulling more people into its catchment, regardless of skill or ability.

Taken to its extreme, eventually professions will be paying their staff all the same wage too.

 

[Inva]

Taken to its extreme, eventually professions will be paying their staff all the same wage too.

An interesting idea, staff would be "rewarded" with working a better/easier/less stressful job, instead of money. But then everyone will root for janitor?

 

[ecommerce84]

Yes, more and more people will find themselves on ‘minimum wage’ for jobs that would have historically been higher.

The living wage won’t necessarily mean that everyone is paid more anyway. Increasingly technology is replacing staff even in customer facing roles. McDonald’s computerised ordering system, self checkouts, apps to order your food in places such as Wetherspoons.

In my own experience, my last job role saw me managing a team of about 30 seasonal workers, all on minimum wage with a budget given to me of £140k. This was in 2014. My budget remained at £140k in 2015, 2016, 2017 and 2018, despite increases in the minimum wage.

So no one was any better off, as in order to meet my budget, staff were on the rota to start later, finish earlier or both. At weekends, we would have 3 ‘experienced’ staff and usually 3 or 4 students/teenagers to help out.

As I departed I’d whittled this down to just 1 experienced staff and 5 or 6 younger staff because they were that much cheaper - luckily we always managed to recruit very good younger staff so customer service was not affected.

Obviously this isn’t always possible, but for many businesses it is and I imagine most will go down this route.

I almost feel a bit sorry for my successor as I know that the war budget won’t increase even when the minimum wage hits £9.

 

[Newchodge]

Perhaps look at increasing the higher level wages by the same amount as the NMW increase, rather than the same %?

 

[UKSBD]

An interesting idea, staff would be "rewarded" with working a better/easier/less stressful job, instead of money. But then everyone will root for janitor?

A mild-mannered janitor?

 

[Mr D]

Perhaps look at increasing the higher level wages by the same amount as the NMW increase, rather than the same %?

Interesting idea.

Ultimately it may come down to what is affordable. Other costs go up, suppliers have their costs go up so put their prices up, pension costs, government adding in costs etc.
So prices rise is one solution.

Or as ecommerse84 said the hours are cut or cheaper staff get the work.

Plenty of people will not get the same pay rise, the same income increase. So if prices go up they get their money squeezed.....

Put the price of bread up - the benefit claimant and the pensioner are not getting a 60 odd a month pay rise every year. Us business owners may have a little more control over our own income. The workers may need to take on a 2nd, 3rd etc job....

Minimum wage for 40 hour week will hit 20k in a few years at this rate.

 

[Mr D]

A mild-mannered janitor?

Henry?

 

[UKSBD]

Henry?

Penry

 

[Talay]

Interesting idea.

Minimum wage for 40 hour week will hit 20k in a few years at this rate.

It won't take that long.

Today, £8.21 x 40 x 52 = 17.1k

£20k = £9.62 per hour !

 

[Newchodge]

It won't take that long.

Today, £8.21 x 40 x 52 = 17.1k

£20k = £9.62 per hour !

And is that an unreasonable amount for someone working a 40 hour week? Is that an amount a single person might live on without having to claim benefits from the givernment, especially considering that this rate only applies to those aged over 25.

 

[sirearl]

And is that an unreasonable amount for someone working a 40 hour week? Is that an amount a single person might live on without having to claim benefits from the givernment, especially considering that this rate only applies to those aged over 25.

Appealing to reason over greed has never worked.

No one can live a decent life style on 10 pounds an hour in a large city.

 

[Mr D]

It won't take that long.

Today, £8.21 x 40 x 52 = 17.1k

£20k = £9.62 per hour !

Considering 4.9% of £17.1k is £837 so in 2020 would be £17.9k then if same percentage used it would be £878 rise and so on it would take a few years.

 

[Mr D]

And is that an unreasonable amount for someone working a 40 hour week? Is that an amount a single person might live on without having to claim benefits from the givernment, especially considering that this rate only applies to those aged over 25.

How much is needed specifically? How much is enough?
Lets see, how much does a single person on say jobseekers allowance get?
£57.90? Up to age 24, not that age 25 gives much higher costs.
So we expect a chunk of the adults to live on a small weekly amount - surely anything beyond that figure plus rent / mortgage /council tax / running a vehicle is extravagant?
£20k may seem like not a lot to you - there are times I've run a household with 2 adults and 7 pets on less without benefits.

 

[Mr D]

Appealing to reason over greed has never worked.

No one can live a decent life style on 10 pounds an hour in a large city.

Darn, must tell all those people who live in large cities that they cannot live a decent lifestyle on their wages that are below £10 an hour.

Perhaps they will be surprised that they cannot do that. What with doing it already.

 

[pentel]

National living wage should become global living wage. Would reduce unnecessary transport and provide more local jobs.

 

[JEREMY HAWKE]

I don't like the unions but a friend here who was a knowledgeable union rep always warned me about this .
He said as the unions are losing their power it will eventually effect every employed person He was right

When we leave the EU employed people will be effected even further as new EU laws to protect workers will not benefit the UK

 

[Inva]

National living wage should become global living wage. Would reduce unnecessary transport and provide more local jobs.

Hilarious! What a simplistic thought. You came to this conclusion how exactly?

 

[chalkie99]

National living wage should become global living wage. Would reduce unnecessary transport and provide more local jobs.

Hilarious! What a simplistic thought. You came to this conclusion how exactly?

Agreed!

On the other hand he/she did post this at 1.52 am so possibly over tired.

Anyway, if you'll excuse me I have to go and call the Chinese Embassy and tell them they will have to fall in with our wage structure. I don't care if they have different living costs we simply cannot be dictated to by Johnny Foreigner any more.

Not expecting much of a problem .....

 

[Mr D]

National living wage should become global living wage. Would reduce unnecessary transport and provide more local jobs.

One way to get rid of cheap holidays, cheap food, cheap goods. You don't mind spending a much bigger chunk of your income on anything from overseas then?
How about those on limited income - who could not afford what you can afford?

Wage increase providing more local job - must admit that's a new one. Over the years have seen job numbers cut to deal with wage increase, cannot recall seeing an employer both increase wages and take on more staff.

 

[Financial-Modeller]

Agreed!

On the other hand he/she did post this at 1.52 am so possibly over tired.

Anyway, if you'll excuse me I have to go and call the Chinese Embassy and tell them they will have to fall in with our wage structure. I don't care if they have different living costs we simply cannot be dictated to by Johnny Foreigner any more.

Not expecting much of a problem .....

Given that much of the world lives on less than USD1 per day, @pentel is presumably advocating that the global living wage would be slightly above that to appeal to the majority!

 

[Mr D]

Given that much of the world lives on less than USD1 per day, @pentel is presumably advocating that the global living wage would be slightly above that to appeal to the majority!

Wages globally have dropped again?

 

[Talay]

And is that an unreasonable amount for someone working a 40 hour week? Is that an amount a single person might live on without having to claim benefits from the givernment, especially considering that this rate only applies to those aged over 25.

Yes it is an unreasonable amount but you can trace the issue back to Loony Labour from 1997 when they "created" millions of jobs by putting half the country onto Tax Credits and having people work out how much to pay them in benefits after actually taking that amount off them in income tax.

Utter madness !

Benefits are too high and too easily obtained. The safety net gives people way too much money which pushes up wages because they don't want to work when benefits are so high.

In a free market, some jobs would not pay £5 an hour but there would be people willing to do them or else they would starve.

Go advertise part time work and see who applies ? Most folk only want to do 16 hours so they can get MORE benefits. They don't actually want to work at all but take away the benefits and they have to work.

 

[Newchodge]

Benefits are too high and too easily obtained. The safety net gives people way too much money which pushes up wages because they don't want to work when benefits are so high.

You have, fairly obviously, not seen the current level of benefits that people are expected to survive on. Why do you think there are so many food banks? What has the number of homeless increased so much if thesafety net worked s it should?

 

[Mr D]

You have, fairly obviously, not seen the current level of benefits that people are expected to survive on. Why do you think there are so many food banks? What has the number of homeless increased so much if thesafety net worked s it should?

The number one reason for several years why people use food banks?
Not benefit amounts.

Benefit delays.

Benefit rates being too low not solved by the average food bank use of 6 days of food a year.

Number of homeless - that due to benefit amounts? Or other reasons?

 

[serendipitybusiness]

Are you kidding, benefits are not too high and are not easily obtained especially with sanctions and universal credits rolling in. I have never been on them but I grew up with a single mother on them and that was when it was more on the line with cost of living. I watched her struggle to get off benefits for years she even got a 2.1 degree and couldn't get work.

I also watched her cry as she battled trying to pay the gas and electricity whilst also putting food on the table. That was when benefits were 'easy'. She tried to hide it but I saw enough to be determined that I would be in charge of my destiny so I was never put in that position. That was at the age of 5. It is a lot harder now, anyone that says it is easy should try living off what they would get on benefits for 6 months and then tell everyone how easy it is.

Yes there are people that take advantage of the system but they are few compared to the people who actually need it to survive and they are barely surviving. Even people working full time jobs on minimum wage are on the streets now in some areas.

Better workplace attitudes to parents and people with disabilities would help a lot, that is something we, as business people, CAN control. Zero hour contracts are also a major issue. It is tough out there, we are the lucky ones but that coin can flip at any time and the safety net is more like a trap than a cushion.

 

[Mr D]

Better workplace attitudes to parents and people with disabilities would help a lot, that is something we, as business people, CAN control. Zero hour contracts are also a major issue. It is tough out there, we are the lucky ones but that coin can flip at any time and the safety net is more like a trap than a cushion.

Well this disabled worker thanks you.
I know something of what my parents went through when I was growing up, including unemployment and government employment schemes, sackings and food banks (they aren't a new thing).

Perhaps none of us have the same problems as this shopper...

https://uk.yahoo.com/news/angry-sho...uard-tells-cant-come-guide-dog-203126251.html

 

[Paul Norman]

I am wondering how one goes about claiming these 'easy to get' and 'high' benefits.

I am fortunate enough not to need any. But were I to become unable to work, I believe I would receive less than £1k per month, and most probably would have to manage for several months on nothing until my claim was processed.

Now, back to the topic. The minimum wage is not a massive burden for us, simply because no one in our businesses earns that low a salary anyway. Personally, I believe the minimum wage to be a necessary protection against businesses driving wages down to the lowest possible rate - exploiting the vulnerable and desperate. And, as the minimum wage is still far short of a sufficient amount to live on, I do not begrudge people this protection.

 

[bodgitt&scarperLTD]

It is getting expensive to employ. I was chatting to a friend in my trade (groundworks) the other day, showing him a new machine I'd bought. I said, it's expensive for what it is, but it'll save a bit of labour most weeks. He said, "Well I don't blame you, I mean, even an idiot costs you £100 a day nowadays!" He's right, by the time you add it all up (holiday, pension, NI, PPE and sick days) a basic labourer on PAYE is costing you that.

Personally I'm feeling more and more inclined to have expensive tools that save labour and don't cost money when they're sat idle.

 

[dan19900]

I've got employees in the UK on 8 pounds per hour and employees in the Philippines on 8 pounds per day. Please do tell how someone can't manage to live on 1200 pounds per month, I lived on 6-700 when I was starting my business 5 years ago.

 

[Newchodge]

I've got employees in the UK on 8 pounds per hour and employees in the Philippines on 8 pounds per day. Please do tell how someone can't manage to live on 1200 pounds per month, I lived on 6-700 when I was starting my business 5 years ago.

Tax 45 per month
NI 60 per month
Rent 500 per month
Council tax 125 per month
water rates 30 per month
Gas/electricity 80 per month
travel expenses 75 per month
phone 20 per month
TV licence 13 per month
That's £955 gone before you start on food, clothing, school dinners. etc. Those costs haven't changed much in 5 years.

I don't believe you

lived on 6-700 when I was starting my business 5 years ago

unless you had subsidised living expenses.

 

[Mr D]

I am wondering how one goes about claiming these 'easy to get' and 'high' benefits.

I am fortunate enough not to need any. But were I to become unable to work, I believe I would receive less than £1k per month, and most probably would have to manage for several months on nothing until my claim was processed.

Now, back to the topic. The minimum wage is not a massive burden for us, simply because no one in our businesses earns that low a salary anyway. Personally, I believe the minimum wage to be a necessary protection against businesses driving wages down to the lowest possible rate - exploiting the vulnerable and desperate. And, as the minimum wage is still far short of a sufficient amount to live on, I do not begrudge people this protection.

Yet millions apparently do live on minimum wage, and quite likely the number living on it is growing as more and more people are absorbed into the minimum wage.
How many here would be unable to cope with say a £700 increase in wages each year?

 

[Mr D]

I've got employees in the UK on 8 pounds per hour and employees in the Philippines on 8 pounds per day. Please do tell how someone can't manage to live on 1200 pounds per month, I lived on 6-700 when I was starting my business 5 years ago.

My wife will, from April, be on minimum wage unless her employer gives any sort of pay rise.
We have worked it out - 2 adults, above average house bills, plus 4 pets - and we can live on her wage alone.
She does a 30 hour week.

If something was to happen to me and she had to run the house, car and feed the pets without me in the picture she could do so on her 30 hour a week minimum wage. No help from government.

 

[Mr D]

Tax 45 per month
NI 60 per month
Rent 500 per month
Council tax 125 per month
water rates 30 per month
Gas/electricity 80 per month
travel expenses 75 per month
phone 20 per month
TV licence 13 per month
That's £955 gone before you start on food, clothing, school dinners. etc. Those costs haven't changed much in 5 years.

I don't believe you
unless you had subsidised living expenses.

So by your figures someone on £1200 a month would have £245 for food, clothing etc.
Hey that's almost as much as someone on benefits gets for considerably more than food and clothing.
Now if you start with school dinners then presumably a child in the house. No child benefits claimed? That's the first thing a benefit advisor would pick up on.
If no other adult in the house then discount on council tax.

 

[Mr D]

I am wondering how one goes about claiming these 'easy to get' and 'high' benefits.

I am fortunate enough not to need any. But were I to become unable to work, I believe I would receive less than £1k per month, and most probably would have to manage for several months on nothing until my claim was processed.

Now, back to the topic. The minimum wage is not a massive burden for us, simply because no one in our businesses earns that low a salary anyway. Personally, I believe the minimum wage to be a necessary protection against businesses driving wages down to the lowest possible rate - exploiting the vulnerable and desperate. And, as the minimum wage is still far short of a sufficient amount to live on, I do not begrudge people this protection.

There aren't any 'easy to get' benefits.
There are benefits - along with people willing to contact the DWP whingeing that you get benefit. Britain doesn't have any benefits for disabled, they have benefits for those who meet requirements.
PIP for example, far tougher than the disability living allowance it replaced - the assessors turn down a lot of people, some get it on appeal but its subject to review and often time limited to apply again, get turned down again etc.

 

[dan19900]

Tax 45 per month
NI 60 per month
Rent 500 per month
Council tax 125 per month
water rates 30 per month
Gas/electricity 80 per month
travel expenses 75 per month
phone 20 per month
TV licence 13 per month
That's £955 gone before you start on food, clothing, school dinners. etc. Those costs haven't changed much in 5 years.

I don't believe you
unless you had subsidised living expenses.

IIRC:
300 rent
100 food
less than 100 council tax
less than 100 bills
100 misc

That was living with a mate in Bournemouth, could of done it for less in the north.

 

[Newchodge]

IIRC:
300 rent
100 food
less than 100 council tax
less than 100 bills
100 misc

That was living with a mate in Bournemouth, could of done it for less in the north.

So you had subsidised living expenses - only paying half the rent, council tax and utility bills.

 

[dan19900]

So you had subsidised living expenses - only paying half the rent, council tax and utility bills.

Not really subsidised is it? We just shared the rent on a 2 bed flat lol. Could get my own flat for that in the north, not a chance I'd be living in sunny sunny Bournemouth if I was planning to spend my whole life working on minimum wage.

 

[Mr D]

So you had subsidised living expenses - only paying half the rent, council tax and utility bills.

You know anyone who doesn't live alone?

 

[serendipitybusiness]

Not many rentals around for £500 a month in a lot of areas today. House shares in Bournmouth are about this now. Also house sharing is great when you are in your 20's and even early 30's but I think very few would want to do it for the rest of their lives. No room to support a family in that either.