Minimum Wage is increasing from £8.91 to £9.50 ...
- Thread starter JCBrown
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An economy is a fairly complex beast, and to a certain extent self regulating. You can't just artificially increase one thing in isolation and expect the economy not to correct it. All that will happen is that the spending power of the higher rate, will be reduced to that of the old rate (with all other things being equal).
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- For some, struggling employers it will be too much and they will either reduce hours or fail.
- For some, large highly profitabe employers they will reduce hours and maintain profitability.
- For those employees on universal credit that 59p per hour increase will be worth about 19p because of the benefit reduction that will follow, they will struggle even further, get into arrears, potentially become homeless.
- For those employees who have savage attachment of earnings orders against them, they will benefit very little or may even be worse off.
- For those employees on low hours or zero hours contracts it may make a little difference.
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In real terms, the spending power of someone on this minimum rate is going to be less than it was a few months ago.
But, of course, if we didnt make this increase things would be even worse. It's a complex argument. I do not begrudge this people this increase.
But, of course, if we didnt make this increase things would be even worse. It's a complex argument. I do not begrudge this people this increase.
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Correct me if I'm wrong, but the headline figure of £9.50 is the living wage. Minimum wage is rising to just over £9 IIRC.
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The most prolific minimum wage sector is hospitality - where circumstances have caused wages to rise above this level.
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I'll correct myself! It appears we now have NMW for up to 23 year olds, and NLW for over 23s.
More soundbites....
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You have succumbed to the Tory government publicity stunt.
About 4 years ago the Tories renamed the National Minimum Wage for those aged over 25 (now 23) 'the National Living Wage' in the hope that people who weren't paying attention would believe they had raised the NMW to the level of the recommended living wage. The voluntary living wage is not national because it assesses the needs of some peple in expensive areas as higher than others. It is about £1.50 higher than the NMW for people over 23, which is called by those who try to fool people the National Living Wage. Those same lying fraudsters have retained the name 'National Minimum Wage' for those aged under 23 which is at a lower level because, obviously, if you are under 23 all your living costs are much lower.
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Not sure that I understand the logic of this. If their income increases by 19p per hour, why would they struggle more, get into arrears and become homeless?
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If you cant afford to pay a good wage then dont employ people
This. And if you can only hire people if the government subsidies them, then you need to question your business model.
Sadly, though, the government encourage this. I get phone calls from them. Would I like to employ some people I don't need, as apprentices, if the government pick up the tab.
I will, and do, hire people when I can afford to pay them.
But I love this topic. People believing that paying enough to live on is destroying business. It is not.
I, as a business owner, create jobs, and get rewarded. But let me be clear on this. Those people that I am employing are creating most of the financial reward I then receive.
But most of the arguments are too one sided. I can, and do, pay more. But we have seen that, without legislation, some employers would pay themselves millions whilst watching others struggle. I do not expect much applause for pointing that out. But the site of millionaires wanting to reduce the minimum wage is not edifying.
The Chancellor has gone a middle, and I think, both sustainable and sensible route. Modest increases, but in front of inflation. I can easily afford to pay this and hold my own salary the same.
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That’s also true. But equally, there are many sectors/products where margins are low. Is it better to employ 30 people on minimum wage, or none at all and just get a job?
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I would argue that, with the current rather modest minimum wage, that business is going under soon anyway.
Let's all remember, of course, that the demand for staff - the market place - is going to drive wages up more than legislation.
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D
Deleted member 59730
Spoke with someone this morning who told me of a business which has not had a staffing problem for years but this year have hit serious difficulties. They employ 130 but only a handful are full time. Many of their workers can only work limited hours because of problems with childcare, aged parents and other demands on their time.
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Unless i have got it wrong this is actually also another bit of spin - my maths may be out by a bit but i think this actually raises more money for govt due to the NI changes and that is why it has been don
The >23 min wage may have gone UP by 6.6% 59p to £9.50 which for a full time worker is about £19k BUT those people will also all lose 1.25% on about 10k through the rise in NI so aggregated about a +6% rise max or 53p per hour
The employer will have to fund the 6.6% 59p, the rise in pension on 6.6% 1.7p , the NI on the 6.6% 8.1p plus 1.25% on the entire £9.50 (NHS covid surcharge) 11.8p so an additional 80.7p or +9%
the difference between rise in takehome to worker and rise in cost to company is rise in take by govt
The >23 min wage may have gone UP by 6.6% 59p to £9.50 which for a full time worker is about £19k BUT those people will also all lose 1.25% on about 10k through the rise in NI so aggregated about a +6% rise max or 53p per hour
The employer will have to fund the 6.6% 59p, the rise in pension on 6.6% 1.7p , the NI on the 6.6% 8.1p plus 1.25% on the entire £9.50 (NHS covid surcharge) 11.8p so an additional 80.7p or +9%
the difference between rise in takehome to worker and rise in cost to company is rise in take by govt
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Because their income is increasing by a tiny percentage while their costs are increasing by around 5%, so a net decrease in the ability to meet bills.
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I don't think increasing NMW is the proper answer. There needs to be a full assessment of the real cost of living, to ensure everyone has access to the basic necessities. There needs to be a review of tax thresholds and levels (including NI). The recent NI increase needs to be reversed and replaced with fair taxation of those who can afford to pay it.
As 30 millionaires recently told the Guardian, the cost of dealing with the pandemic should not fall harder on care workers, street cleaners and teachers. (I paraphrase). https://www.theguardian.com/news/20...-petition-rishi-sunak-to-introduce-wealth-tax
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An interesting counter question might be this.
How much do you and I pay the lowest earners in our business?
Of course, that will depend a bit on what the lowest earners do! Ours would be trainee programmers, who would typically be straight from uni. We certainly pay those people more than the figures above.
I kind of agree with Cyndy, though. This is too blunt an instrument. However, I do believe that, at the lower end, earnings are too low to be sustainable, and that does not seem right. I do note, too, that some of those against this rise can easily afford to pay it - and many will - without passing it on. The idea that most businesses are so squeezed for profit that they cant pass this on is not accurate. Some are. Different challenge.
But, to stick to the topic, and to answer the question, personally I would probably not increase it much beyond the proposal by Rishi. But I would look at some other way of ensuring a basic minimum income level
How much do you and I pay the lowest earners in our business?
Of course, that will depend a bit on what the lowest earners do! Ours would be trainee programmers, who would typically be straight from uni. We certainly pay those people more than the figures above.
I kind of agree with Cyndy, though. This is too blunt an instrument. However, I do believe that, at the lower end, earnings are too low to be sustainable, and that does not seem right. I do note, too, that some of those against this rise can easily afford to pay it - and many will - without passing it on. The idea that most businesses are so squeezed for profit that they cant pass this on is not accurate. Some are. Different challenge.
But, to stick to the topic, and to answer the question, personally I would probably not increase it much beyond the proposal by Rishi. But I would look at some other way of ensuring a basic minimum income level
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From this starting point yes - but what i would have done is not a 1.25% NI increase which is irrelevant to higher earners. I would have increased the NI bands so it kicked in later and carried on to higher earners. I would have set the lower banding so the average earner saw it cost neutral (rise in freepay element equalled the 1.25% rise), that would allow a lower rise in NMW (or a greater take home rise for the same headline rise at least), I would also ensure the taper on universal credit was changed to ensure nmw earners see the rise in pay not just watch it majority go straight back out in reduced benefit at the same time they have just had a £20 cut and fuel/food prices are rising. Poorer people are more affected by inflation as a greater % of their spend is non discretionary and on necessities
At the end of the day if low earners see a rise in NMW as actually a real terms cut or at best neutral then it does nothing politically for the govt and nothing positive for the morale of staff - if at the same time it is a bigger rise for companies some of whom (particularly in hospitality etc) are struggling to get back on an even keel post covid. Any rise in costs will transfer through to pricing (especially in labour intensive industries like hospitality) and that rise will feed back into low earners feeling it in their pockets and being even less happy with the rise
If we have interest rate rises coming soon (pretty much nailed on) companies need to be reducing their debt burden now if they can, not giving a greater % of their turnover to govt. (NI is a tax not related to profit unlike most others )
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Which part of the country do you choose? To we assess the cost of living in the poorest areas or the most expensive? Do we take a mean? Who defines the basic necessities? Is fast broadband a necessity? What about a TV? Do we assess using the cost of secondhand furniture or are we going to use IKEA as the baseline?
I got involved in a project doing very similar about 10 years ago and it's almost impossible to come up with an agreed figure that works nationally.
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Also my cost of living as someone now mortgage free having bought a house in the early 90's is different from someone who has rented since then or someone young with a huge mortgage now
For the same reason whilst i agree with UC as a principle I don't think Housing benefit should be included in it as it is too geographically disparate and therefore a national cap etc is pointless
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I can't understand why we have so little government owned social housing
HS2 is a perfect opportunity to build social housing near where they plan on having stations.
Government owned and partly funded by whoever benefits most from HS2
Housing costs and rent effect the low paid more than anything else, so why not provide more cheap housing?
HS2 is a perfect opportunity to build social housing near where they plan on having stations.
Government owned and partly funded by whoever benefits most from HS2
Housing costs and rent effect the low paid more than anything else, so why not provide more cheap housing?
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Do we have ANY government owned social housing? There is mich less local authority housing stock since the right to buy was coupled with a prohibition on councils using the money received to build more housing. Housing Associations are, in some cases, rather less 'social' and more business.
Cheap housing affects the income of wealthy property owners, perhaps that is why?
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Yes, but housing was treated separately, which was the main reason for the difference. Also, supplementary benefits (for those on low incomes) were treated differently to primary benefits. If someone had a special purchase to make, school uniforms at the start of the school year, for example, that was claimed and paid seperately.
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I think they base it on the social housing cost in the area you are in and also members in the household
i.e
If you are a single person in Middlesbrough they base it on the cost of a 1 bed social housing flat in Middlesbrough
If you are a single person in Stratford-upon-Avon they base it on the cost of a 1 bed social housing flat in Stratford-upon-Avon
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Almost. Each local authority has a local housing allowance rate. Gateshead's is here https://www.gateshead.gov.uk/article/1839/Housing-Benefit.
That is the amount that it is assumed your rent should be. Doesn't matter what it is. Doesn't matter if you are a couple living in a 2 bed property. Your housing benefit is based on the local housing allowance and how many bedrooms you are deemed to be entitled to.
The fact there is no 1 bed accommodation anywhere, the fact that, even if there were, you do not have any money to move into it, none of that matters. Your housing benefit is decided according to this formula. And if your rent is actually £50 per week higher, then you have to find the £50 per week to pay it. Which is impossible as you would not get housing benefit if you had a spare £50 per week.
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I know the amount of housing benefit you can get is locally derived but isnt the UC Benefit cap a national figure (well Greater London and "elsewhere") so in some ways it is irrelevant how the local amount for housing benefit is derived and how much it is once you are hitting the cap.
So a person in Bolton can have a larger house paid for by the govt than a person in Windsor even if all other circumstances remain the same - and remember for many many low wage earners having family support locally can be the difference between being able to work or not as childcare is not affordable for many so just saying "move form Windsor to Bolton" is not an economically viable (or good for the country on average)
So a person in Bolton can have a larger house paid for by the govt than a person in Windsor even if all other circumstances remain the same - and remember for many many low wage earners having family support locally can be the difference between being able to work or not as childcare is not affordable for many so just saying "move form Windsor to Bolton" is not an economically viable (or good for the country on average)
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I would question what would be the outcome if the minimum wage had not been introduced. would the companies still given any pay rises to keep up with inflation or other higher living costs. or would the lowest wage earners have just seen there wages stay the same or get maybe a tiny increase over say the last 5 years or so
Its always easy to bring in the people on benefits , but there are millions who work full time on the minimum wage who do benefit from the increase, admittedly not by a vast amount but better than nought
Its always easy to bring in the people on benefits , but there are millions who work full time on the minimum wage who do benefit from the increase, admittedly not by a vast amount but better than nought
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