Higher wages for low paid workers coming

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£100Higher wages for low paid workers are coming with both the Low Pay Commission consultation due to report to the Government by February and on Sunday Ed Miliband pledged a minimum £8 per hour wage by 2020.

Currently the minimum wage is £6.31 per hour, due to rise 3.01% to £6.50 per hour from the 1st of October. This is one of the biggest increases over the past 9 years since the minimum wage was first introduced. Yearly increases have averaged £2.85%. Ed Miliband’s proposed increase would mean six consecutive annual increases of 3.52%.

It’s interesting to see Ed Miliband jump on the minimum wage so soon after the Scottish Referendum, where all three party leaders appear to have incurred the wrath of their MPs with their last minute pledge to Scotland. It also comes just before the Labour party conference. An increase in the minimum wage is likely to appeal to large swaths of the electorate, especially those of course on the lowest incomes.

Of course if you raise the minimum wage the country also starts to save a whack on other benefits. The government subsidises low pay with Tax Credits and Housing Benefits, for example. 90% of people in London and the SE who receive Housing Benefits are in full time work. It does seem wrong that someone who puts in a full week’s work still has to rely on government handouts to survive, although the increase in income tax allowances has also helped in recent years.

We won’t know what the Low Pay Commission will recommend until next year, but Labour’s stake is now firmly in the ground with an £8.00 promise by 2015. The big question is, is £8 per hour in 2020 enough?

Currently the so called “Living Wage” is £7.65 (£8.80 in London). Assuming an annual 3.52% minimum wage increase it will be 2019 before today’s Living Wage is reached, by which time doubtless the cost of living will have risen sharply and the minimum wage still won’t be enough to survive on.

How will a steady 3.52% increase in the minimum wage affect your business? What do you pay your own workers currently? Would an £8 an hour wage overly impact your business’s profits or do you already have to pay a higher rate to secure quality employees.

More to the point do you think that Labour’s proposal of £8 per hour in six years time is enough? Do you think you could live on £8 an hour in 2020?

22 Responses

  1. Howdy Chris,

    More to the point do you think that Labour’s proposal of £8 per hour in six years time is enough? Do you think you could live on £8 an hour in 2020?

    Speaking for myself, which I’m guessing would be the same of nearly all fellow readers of Tamebay.

    As a business owner, I would rather work on zero or negative amounts per hour if needed, so that in the future I have to never worry about a minimum wage.

    Perhaps a better question would be, do you think your UK staff can live on £8 an hour in 2020?

    Matt
    PS. At a £6.50 with 3.5% annual increase, by 2020 would be £7.99p/hr, that’s a 1p payrise suggested by Labour.

  2. There has always been a problem with the National Minimum Wage. The UK does not have one unified economy. The UK has a series of different economies covering the country. The National Minimum Wage may very well be appropriate to some parts of the Country but not to others.

    As has been pointed out on numerous occassions I live and work in a small Cornish Village. But when the NMW was first introduced it caused chaos in many a small Village Shop(before you ask this Village is probably too small for a Village Shop).

    What happened was that the Shop Keeper calculated just what it would mean to his shop with its finances and he decided to cut back on his staff and possibly to cut back on his opening hours as well. So those hours when nothing much happened and only one member of staff was on duty but he had always considered it to be a service to his community went.

    Many small local businesses closed altogether. So leaving communities without a shop or whatever. But of course it also meant that people who previously had a job even if at a low wage were now unemployed with almost no chance of ever getting another job.

    In case anybody suggests catching a bus to the nearest town. They have to remember that over many parts of Cornwall the buses have been cut back. A few years ago we had bus routes that only ran on Market Day and then one trip in in the morning and one back in the afternoon(although most of these have either become full daily bus routes or have disappeared),

    But is does nobody any good to put in force regulations such as National Minimum Wage and then set them so high that many in some poorer areas promptly lose their jobs and their customers lose their services. But the rules are always set by the unthinking who are always located in the richer more prosperous areas without any consideration of the problems in other areas.

  3. I understand wages need to increase, the difficulty is when wages increase prices have to increase, if my staff base has an increase of 3.5% then I have to either find the money somewhere or increase prices by 3.5%.

    Plus dear old Ed said at the weekend that it would save the government money, the government is the UK’s largest employer, as it wouldn’t have to pay out benefits. The issue will be in five years time everything else will of gone up by then so they won’t be able to cut the benefits back.

    Vicious circle I think….

  4. I’m with Chris T. If there has to be a higher minimum wage it should only apply to certain companies, maybe PLC’s or comanies with a certain number of staff such 50+.

  5. I’m willing to bet that most folk here wouldnt get outta bed for £8 an hour.

    They would however bitch like hell about spending it!

  6. An average of 3.52% for the next six years… Bring on Auto-Enrolment and there’s another 1% to 3% on top.

    Well thought out Mr Miliband. More job cuts here we come!

  7. The Minimum Wage increase is a must…
    Average wages have not fallen at this level since the Victorian era.

    Higher pay creates a more motivated workforce and increases productivity.

  8. £8 an hour, exactly one of the MANY reasons I won’t be voting labour and ‘RED Ed’ in power LOL no thanks.

  9. £8 minimum wage is a ridiculous level. It will just deter me from hiring new staff at that level.

    This is a typical ploy by socialist idiots on the left who think that raising the minimum wage (above market rate) is the way to boost the economy. In fact anything that comes from a socialists mouth re boosting the economy is laughable. These people only know how to take from some to give to others.

    The consumption boost argument is also rubbish (because it ignores all the issues it causes) but that won’t stop labour pandering to the idiots / less successful / uneducated / lazy people who are the vote base for the party. Feed them lies and like the uneducated illiterate people they are they will vote for the party that promises them less work and more pay.

    What people also forget is that once the base moves up to £8 then those earning £8 will now ask for say £10, those on £10 will then ask for more etc. etc. This just adds onto costs.

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