Thoughts on new minimum wage rate?

[simon field]

‘Global greedflation’: big firms ‘driving shopping bills to record highs’

Analysis by UK union shows large corporations have improved profits with price rises in cost of living crisis

www.theguardian.com

Wage increases are not the main cause of proce inflation.

That, and recklessly printing money!

Ah well, the tories will be raking in 25% corp tax soon, so they can have a nice big chunk of money to throw at us from those tasty profits eh?

 

[Duke Fame]

Then the business needs to change its income or its costs to cope with the legal requirements.
Common method is put prices up. For everyone, not just those who got a big pay rise.

Very true,

We are recruiting a Sunday girl for our shop, given the retail margins, the difference in min wage means she now has to make £210 of sales compared to £190 to justify her employment.

We normally include a commission structure so this now kicks in a little later.

 

[Duke Fame]

‘Global greedflation’: big firms ‘driving shopping bills to record highs’

Analysis by UK union shows large corporations have improved profits with price rises in cost of living crisis

www.theguardian.com

Wage increases are not the main cause of proce inflation.

I'd take anything the guardian says re. business with a pinch of salt. Their readership consider business owners as capitalist pigs who are class sell outs.

 

[Duke Fame]

As I'm sure you are all aware, the minimum wage increases to £10.18ph for those 21yrs and over with the National Living Wage increasing to £10.42ph

In principle, I agree that we should all pay a fair rate to our staff across the board, but the difficulty is maintaining differentials with a bottom end jump of 10.9%

What are you guys doing this year?

We had our local business group meet tonight and this came up for discussion.

We came up with a few suggestions and it was of course down to the individual retailer but we have decided that business is quiet pre 11 on most days except for coffee shops + hairdressers so most shops will reduce hours and only open at 11 a.m. each day except Saturdays. Mondays was closed for most anyway. Saving an hour and a half would mean we are roughly paying the same wage.

Tescos has apparently stopped a lot of 24 hr opening and shortened the night shifts.

Nobody was confident about putting up prices

 

[Mr D]

We had our local business group meet tonight and this came up for discussion.

We came up with a few suggestions and it was of course down to the individual retailer but we have decided that business is quiet pre 11 on most days except for coffee shops + hairdressers so most shops will reduce hours and only open at 11 a.m. each day except Saturdays. Mondays was closed for most anyway. Saving an hour and a half would mean we are roughly paying the same wage.

Tescos has apparently stopped a lot of 24 hr opening and shortened the night shifts.

Nobody was confident about putting up prices

So keeping the wage bill the same - great for the business.

Not so great for the employees. But good for the customers.


No good answer that solves all problems. To solve one creates problems for another.

 

[Greg PW Shearman]

Lets use the hospitality industry as an example.

They use a lot of minimum wage staff on zero hour contract.

If you were operating a site in this sector you will be brutal on reducing hours.
Minimising staff ...

and as has been mentioned before if your wage bill goes up you put your prices up so no one benefits as what you earn won't go further...

 

[Newchodge]

Lets use the hospitality industry as an example.

They use a lot of minimum wage staff on zero hour contract.

If you were operating a site in this sector you will be brutal on reducing hours.
Minimising staff ...

and as has been mentioned before if your wage bill goes up you put your prices up so no one benefits as what you earn won't go further...

And they are strugglng to recruit and retain staff because there are now alternatives to minimum wage jobs on zero hours.

The hospitality indistry cannot function without staff.

 

[DontAsk]

And they are strugglng to recruit and retain staff because there are now alternatives to minimum wage jobs on zero hours.

The hospitality indistry cannot function without staff.

There's too much hospitality in my opinion. At least of the high street chain sort.

 

[Duke Fame]

So keeping the wage bill the same - great for the business.

Not so great for the employees. But good for the customers.


No good answer that solves all problems. To solve one creates problems for another.

We have to be brutally honest, staff are employed to be profit generative, if that profit generation isn't positive, we simply don't employ.

Pre-Covid, we employed (in our shop) Saturday support and that person opened the shop on a Sunday. We've just reemployed for that position and the Saturday support will not deliver sufficient revenues so we are just running Sundays. She will get a commission but the commission cuts in later (i.e. when the basic wage is covered)

To take your great for the business & good for the customers but not so great for the employees, the important part is the business and customer, the employee is only an enabler.

 

[Duke Fame]

And they are strugglng to recruit and retain staff because there are now alternatives to minimum wage jobs on zero hours.

The hospitality indistry cannot function without staff.

I think we'll find the labour supply improves soon, unemployment will become a thing again. It's remarkable that given the economic pressures, employment has been strong but that will change, especially if we have a change of governement.

 

[Duke Fame]

We have to be brutally honest, staff are employed to be profit generative, if that profit generation isn't positive, we simply don't employ.

Pre-Covid, we employed (in our shop) Saturday support and that person opened the shop on a Sunday. We've just reemployed for that position and the Saturday support will not deliver sufficient revenues so we are just running Sundays. She will get a commission but the commission cuts in later (i.e. when the basic wage is covered)

To take your great for the business & good for the customers but not so great for the employees, the important part is the business and customer, the employee is only an enabler.

I should say, pragmatically honest

 

[Duke Fame]

And they are strugglng to recruit and retain staff because there are now alternatives to minimum wage jobs on zero hours.

The hospitality indistry cannot function without staff.

Hmmm. I don't think that is the case in all areas. Lots of those who work in hospitality like the flexibility of zero hours contracts.

You are in Newcastle, it's not struggling for staff in the hospitality / night time economy. It's thriving in Newcastle to the extend it's close to pre-pandemic revenues.

 

[Duke Fame]

There's too much hospitality in my opinion. At least of the high street chain sort.

Ultimately, the market will dictate what is too much or too little.

 

[Paulzx]

It seems to me, that regularly increasing the minimum wage, in order to reflect cost of living, only results inevitably, in less opportunities for employees. Yes you get a bit more money, but employers are not going to be so generous with future wage rises, or even taking extra people on. Where we would have at one time, given a few opportunities to younger people, we are not doing so now, because the minimum wage is too high. What will of course happen, is that in some cases, employers will use foreign workers who work for less, therefore further restricting opportunities. I've seen this happen, especially in the building trade.

If you are a company that can afford this without impacting your bottom line, good for you. Most small to medium businesses are not in that situation, and they can't suddenly increase their turnover, profit margins or increase their prices accordingly. It's just not realistic. When you consider we're also paying in to work place pensions, higher corporation tax etc, where is the incentive for the employer?

If we were in a prosperous time of booming economy, that would be different but it's the opposite. There comes a time when you have to question if it's worth it.

 

[MBE2017]

Yes you get a bit more money, but employers are not going to be so generous with future wage rises, or even taking extra people on.

Sorry I blinked, where are these employers with generous future wage rises? Ever wondered why the NMW came into being?

All employers get hit with the NMW figure, so all have to allow for it, but constantly making promises of jam tomorrow to workers who sometimes cannot afford much more than baked beans on toast today simply will not cut it, particularly when management increases of 20-40% are the norm, and some get much more than that.

 

[Duke Fame]

Sorry I blinked, where are these employers with generous future wage rises? Ever wondered why the NMW came into being?

All employers get hit with the NMW figure, so all have to allow for it, but constantly making promises of jam tomorrow to workers who sometimes cannot afford much more than baked beans on toast today simply will not cut it, particularly when management increases of 20-40% are the norm, and some get much more than that.

I don't want to appear rude but that's utter nonsense. What management increases of 40% do you refer to?

You are right, all employers get hit with the NMW figure but staff are employed to be profit generative, if that profit generation isn't positive, we simply don't employ so unemployment goes up. The alternative is the value of money declines and inflation takes hold so the employer can maintain margins back to the position it was pre wage increase.

One of my businesses is retain and for retailers the little guys would quickly go to the wall if NMW keeps going up beyond the margins we make. Many business owners (employers) must be getting to the point that if it wasn't for the fact they are fond of their business and their dream, they'd jack it in and earn more in some pitiful public-sector job and forget the stress. If that happens, your worker who can't afford baked beans will not be able to afford anything.

 

[Newchodge]

It seems to me, that regularly increasing the minimum wage, in order to reflect cost of living, only results inevitably, in less opportunities for employees. Yes you get a bit more money, but employers are not going to be so generous with future wage rises, or even taking extra people on. Where we would have at one time, given a few opportunities to younger people, we are not doing so now, because the minimum wage is too high. What will of course happen, is that in some cases, employers will use foreign workers who work for less, therefore further restricting opportunities. I've seen this happen, especially in the building trade.

If you are a company that can afford this without impacting your bottom line, good for you. Most small to medium businesses are not in that situation, and they can't suddenly increase their turnover, profit margins or increase their prices accordingly. It's just not realistic. When you consider we're also paying in to work place pensions, higher corporation tax etc, where is the incentive for the employer?

If we were in a prosperous time of booming economy, that would be different but it's the opposite. There comes a time when you have to question if it's worth it.

They said all that as an argument against bringing in the minimum wage. None of it were proved true.

 

[MBE2017]

They said all that as an argument against bringing in the minimum wage. None of it were proved true.

Completely agree. All these arguments were made at the introduction of the NMW. Since its introduction few have made the arguments for very long. NMW is one cost, most small companies now probably would prefer utilities to go back down, but they are likely to increase by another 40% in the next two years.

The world economies and the balance of power are shifting rapidly, and people of all levels will be hit. The banking crisis, Russia China alliance, new gold backed currency to potentially replace the dollar, India, Brazil etc on the rise, plenty of change heading our way.

It tends to be too late when employers suddenly remember their biggest asset and resource is their workforce. If a company cannot afford NMW then it probably is not viable, the parity between the top management and lowly workers has never been greater.

 

[IanSuth]

I don't want to appear rude but that's utter nonsense. What management increases of 40% do you refer to?

i cant find 40% but average of 23% for chief execs of FTSE firms

Bosses of the UK’s 100 biggest publicly listed companies have seen their pay jump by an average of 23% to almost £4m because of record bonus payments.

The average pay of chief executives of FTSE 100 companies increased from £3.2m last year to £3.9m this year, according to research by PricewaterhouseCoopers (PwC). The soaring pay at the top comes as companies push back against workers’ demands for pay rises to help them cope with high inflation and the cost of living crisis.

 

[Duke Fame]

They said all that as an argument against bringing in the minimum wage. None of it were proved true.

The economics will always suggest it is true without other externalities changing.

When the NMW was bought in, it was quite low so hardly impacted. What it did do is impact textile manufacturing and other low wage manufacturing.

This was great, it actually reduced Co2 production and other pollutants as these factories closed down. A good example was Dewhirst who had factories in Leeds, Bradford and a host of them in the North East (mainly around the industrial estates in Washington and on in Teams, Gatehead - we may argue that Washington is Sunderland so we shouldn't care about them). Anyway, up until the late 90's, Dewhirst used to make a lot of M&S's clothing, also, Next, River Island, Debenhams etc. Within 2 years, the factories stopped producing, the equipment was sold off to China & Sri Lanka and production moved to the far east. The employment for Dewhirst in the UK fell as the building they kept were just warehouses.

As it happens, 97-2008 marked the great de-industrialisation of the UK economy but these jobs were replaced with service jobs, still low pay but unskilled and reliant on cheap imports and maintaining a middle class who were encouranged to consume via credit.

The problem with that is we had a blip in 2007-10 where credit dried up and the middle class jobs started to go, that's almost certain to be replicated because those IT jobs that were paying big money can be done by someone at a fraction of the cost.

 

[Duke Fame]

Completely agree. All these arguments were made at the introduction of the NMW. Since its introduction few have made the arguments for very long. NMW is one cost, most small companies now probably would prefer utilities to go back down, but they are likely to increase by another 40% in the next two years.

The world economies and the balance of power are shifting rapidly, and people of all levels will be hit. The banking crisis, Russia China alliance, new gold backed currency to potentially replace the dollar, India, Brazil etc on the rise, plenty of change heading our way.

It tends to be too late when employers suddenly remember their biggest asset and resource is their workforce. If a company cannot afford NMW then it probably is not viable, the parity between the top management and lowly workers has never been greater.

Really, that's rubbish.

The workforce is only an employer's "biggest asset and resource" if the workforce produces a return. Once the cost of the workforce is too expensive, the workforce can be dispensed with.

 

[Duke Fame]

i cant find 40% but average of 23% for chief execs of FTSE firms

Bosses of the UK’s 100 biggest publicly listed companies have seen their pay jump by an average of 23% to almost £4m because of record bonus payments.

The average pay of chief executives of FTSE 100 companies increased from £3.2m last year to £3.9m this year, according to research by PricewaterhouseCoopers (PwC). The soaring pay at the top comes as companies push back against workers’ demands for pay rises to help them cope with high inflation and the cost of living crisis.

So, you can find 100 excecs who by the very definition of a Ftse 100 company have steered the 100 most successful companies in the country to success. Yes, they deserve to get the reward a performance related bonus, However, they are an exception and hardly means that "management increases of 20-40% are the norm"

 

[japancool]

So, you can find 100 excecs who by the very definition of a Ftse 100 company have steered the 100 most successful companies in the country to success.

Have they really though? Have the chief execs of BP, Shell, Barclays and the like done anything exceptional that justifies their pay? Or could just about anyone have profited when in their position? Did they do something transformative to their companies that justifies their pay?

Take SVB's bonuses. What success did they have that justifies those bonuses? Having your bank go bust?

 

[Newchodge]

Have they really though? Have the chief execs of BP, Shell, Barclays and the like done anything exceptional that justifies their pay? Or could just about anyone have profited when in their position? Did they do something transformative to their companies that jsutifies their pay?

And that was not part of their normal role.

 

[japancool]

The chief executive of the NHS was paid more than 25% more than her predecessor in 2021. And nurses were offered 4%.

 

[Newchodge]

The chief executive of the NHS was paid more than 25% more than her predecessor in 2021. And nurses were offered 4%.

It is, I am afraid, a universal truth. People in senior, well paid jobs need to be paid in addition to their high salary, if they do their jobs properly. People who are not so highly paid just need to be punished if they don't do their jobs properly.

 

[japancool]

(data may be American, but shows the general principle)

 

[Duke Fame]

And that was not part of their normal role.

There entire role is to deliver shareholder value and packages are usually incentivised to deliver this.

 

[Duke Fame]

(data may be American, but shows the general principle)

(data may be American, but shows the general principle)

And the effect on the price of fish is what?

 

[Duke Fame]

It is, I am afraid, a universal truth. People in senior, well paid jobs need to be paid in addition to their high salary, if they do their jobs properly. People who are not so highly paid just need to be punished if they don't do their jobs properly.

I agree with you on the NHS, there is no need for them to get a bonus unless they find some substantial taxpayer savings.

In the private sector, the guys at the top need to deliver in order to keep the business alive, pay the staff etc.

The public sector are really for the willing unemployable to find something to do. If they much up, generally, it just costs the taxpayer more money.

 

[katesz]

Some studies suggest that modest increases in the minimum wage have little to no impact on employment, while others suggest that larger increases could lead to job losses and higher prices for consumers.

 

[Duke Fame]

Some studies suggest that modest increases in the minimum wage have little to no impact on employment, while others suggest that larger increases could lead to job losses and higher prices for consumers.

That is a logical observation, the reality is it depends on a lot of other externalities but more than anything, it depends on the labour market. Since 2011-12, the demand for labour has been quite strong so the increases in NMW have not had an adverse affect on employment.

I think that will change.

 

[IanSuth]

So, you can find 100 excecs who by the very definition of a Ftse 100 company have steered the 100 most successful companies in the country to success. Yes, they deserve to get the reward a performance related bonus, However, they are an exception and hardly means that "management increases of 20-40% are the norm"

Why are you arguing with me

I didnt make the original claim - i looked for evidence and could only find it re the FTSE 100 execs and at 23%

But with respect to your other comment "those IT jobs that were paying big money can be done by someone at a fraction of the cost" i did IT recruitment for 27 years in the Thames Valley and I can tell you that most IT jobs are not "paying big money", def not by the standards of old manual work in heavy industries. Generally a grad starts (even in Reading) on £24/5k and most of the standard IT support roles are sub £30k, the big money is either with those involved in the sales process (such as pre sales consultants), those doing actual innovative development and those working with a rare skill in a profitable industry. So the same as any other industry really (the people who sell. invent or are scarce)

In fact there are a number of agencies who supply workers to fujitsu to do IT helpdesk on the MOD systems who pay those helpdesk people NMW with the promise it is a good foot in the door to IT and they could move to another perm job internally (both a lie as the systems they support are pretty uniquely out of date and there is v.little movement to other depts) - those jobs won't be outsourced overseas for "security" reasons

Alternatively they take school leavers with 3 good ALevels, start them on 14.5k rising to £17k over 2 years as they put them through a "digital business accelerator programme" apprenticeship which basically means they do the sales order processing (this in a town that touches the civil service outer London weighting zone)

 

[IanSuth]

I agree with you on the NHS, there is no need for them to get a bonus unless they find some substantial taxpayer savings.

In the private sector, the guys at the top need to deliver in order to keep the business alive, pay the staff etc.

The public sector are really for the willing unemployable to find something to do. If they much up, generally, it just costs the taxpayer more money.

There are many many many companies where the management ethos is "earn as much profit as we can by suppressing wages as much as we can get away with" - I took hundreds of recruitment requests form companies whose answer to "how much are you paying ?" was "as much as it takes and as little as we can get away with", that is literally the definition of a free market - but free markets only work efficiently if all parties have full access to information. In many ways the NWM (if set at a sensible level) sets a signpost to low paid workers as to what is the market rate that otherwise they would not know.

 

[DontAsk]

The chief executive of the NHS was paid more than 25% more than her predecessor in 2021. And nurses were offered 4%.

If that 25% were shared out amongst the nurses, how much would each one benefit?

The question should be why was she paid more? Did she deserve it? Did they have to pay more to get someone to take on the role?

 

[Duke Fame]

If that 25% were shared out amongst the nurses, how much would each one benefit?

The question should be why was she paid more? Did she deserve it? Did they have to pay more to get someone to take on the role?

If by paying her 25% more, she saved the NHS more across the board with skills she bought to the table, we as taxpayers will say well done, if not, it she should not have been paid so much.

 

[Duke Fame]

There are many many many companies where the management ethos is "earn as much profit as we can by suppressing wages as much as we can get away with" - I took hundreds of recruitment requests form companies whose answer to "how much are you paying ?" was "as much as it takes and as little as we can get away with", that is literally the definition of a free market - but free markets only work efficiently if all parties have full access to information. In many ways the NWM (if set at a sensible level) sets a signpost to low paid workers as to what is the market rate that otherwise they would not know.

That's a fair point but the NMW is never going to be the right indicator unless is is sett very low.

Currently (and pretty much the last decade) we are in a strange situation where we have full employment so it's not causing an issue.

However, in times of unemployment or geographic differences in the labour market, NMW is a nonsense. How can you set a wage that is the bottom line for someone in the centre of London and apply the same rate for someone in Sunderland? In times of spare labour capacity, there would be lots of people willing to work for under the NMW but the employer can't take them on.

My experience is we'll give a basic of "little as we can get away with" but incentivise with a commission / bonus structure that get's everyone pushing in the right direction and a meritocracy.

 

[MBE2017]

Post 187 makes my point, the disparity in awards for jobs has never between the top and average workers. The main reason being the top guys tend to decide their increases, or have a board of directors approve huge increases knowing they will be rewarded similarly for doing so.

Many of these companies even pay out on failure, I have no problem paying on success, but failure? A normal worker gets the sack, many top execs walk away with a nice bonus.

 

[IanSuth]

That's a fair point but the NMW is never going to be the right indicator unless is is sett very low.

Currently (and pretty much the last decade) we are in a strange situation where we have full employment so it's not causing an issue.

However, in times of unemployment or geographic differences in the labour market, NMW is a nonsense. How can you set a wage that is the bottom line for someone in the centre of London and apply the same rate for someone in Sunderland? In times of spare labour capacity, there would be lots of people willing to work for under the NMW but the employer can't take them on.

My experience is we'll give a basic of "little as we can get away with" but incentivise with a commission / bonus structure that get's everyone pushing in the right direction and a meritocracy.

And i think this is the big difference between us - for you the NMW seems quite high - around here is is very low with respect to housing and travel costs for example.

I said earlier we ought to maybe have regional min wage set in conjunction with local LEPs or Industry bodies

And "a basic of as little as we can get away with" is no good when looking at mortgages or even some rentals as they will only consider guaranteed income so ignore commission/bonus

 

[japancool]

I said earlier we ought to maybe have regional min wage set in conjunction with local LEPs or Industry bodies

I'd be all for regional pay for civil servants as well, but apparently, that's not on.