Monday, February 16, 2009

The Minimum Wage

Last Wednesday, Mr Christopher Chope introduced a Ten-Minute Rule Bill pushing an opt-out clause from the
Minimum Wage , a subject on which he has previous . He makes quite an interesting case based on a human
ight to work and personal liberty to
contract . I am not convinced though

Oddly enough our tiny Company , of four , is actually doing quite well (touch wood). So we thought we might get a typist come gopher in . The main problem ,at this level ,is not so much the minimum wage ( god knows we would if we could ) , it’s the potential risk of being taken to court for who knows what ,and more to the point the agony of getting rid of someone useless.

The regulatory burden dwarfs the minimum wage as a real disincentive to employment .It must cause unemployment but I suspect not for the British. ....
Yes lets get rid of the minimum wage but it is a symbol not a truth .The real minimum wage is the benefit rent council house opportunity cost which is a great deal higher for UK citizens than the torrents of foreigners .This largely symbolic measure is clearly pointless but its removal will do little good. Overall I feel Mr. Chopes speech was unwise , it invites the accusation of exploitation without offering the chance to achieve much .


Mark Wadsworth said...

True. I have ranted about this at length, there are four things to change/get rid of:

1. Silly regulations.

2. National Minimum Wage.

3. The poverty trap - fix this by reducing means testing of benefits to that people only lose 31p for every £1 they earn (instead of >£1 as at present), and increase the personal allowance so that your benefits are tapered to nil just as soon as you become liable to tax/NIC at 31%.(If this also means that the basic level of benefits is reduced, then so be it).

4. Employer's National Insurance ought to be scrapped or at least reduced.

Job's a good un.

WV: dormer

Stan Bull said...

In December 2008, the British Chambers of Commerce wrote to the Low Pay Commission public body, which advises the government on the rate, saying it should remain at current levels until economic conditions had significantly improved.

When jobs are being lost daily and a recession is in full swing, it makes no sense to increase it. But I wouldn't put it past Crash Gordon to up the minimum wage.

British soldiers risking death in Afghanistan and Iraq are being paid about half the national minimum wage.Not a lot of peopğle know that. Least of all the legions of Housing Benefit claimants.

Feldi said...

The minimum wage is a big problem for many SMEs, especially those supplying the vastly rich blue chip, mutinational supermarket groups. Take the field of recruitment alone.

SMEs don't tell these giants what their charge rates are, these are dictated by the sups. And they've been massively over-conditoned to expect absurdly low charge rates by their Chinese and other low wage economy suppliers.

Every time the minimum wage is increased, some of these sups use their corporate muscle to enforce a charge rate increase by the minimum wage rate increase and associated ENI alone.

Fair enough, you might think, but that doesn't cover the administrative and credit costs associated with the increase.

So, to take just one example, if the sup - or it's vendor neutral agent - are bad payers (and some are excellent but others are diabolical), it might cost an SME another 1-2% or more to borrow the money to pay their temporary staff weekly. The sup ducks out of that cost by effectviely passing it on to the SME recruiter, so the sup cuts its minimum wage outgoings and its credit charges, thereby making a killing which it offsets against its own minimum wage increase.

asquith said...

Purely out of interest, have you ever been at/near minimum wage level, or were you in a very low-paid job before 1998?

Myself, I started work in 2003 when I worked part-time in a warehouse whilst at university, & had a labouring job in a factory in summers, both of which were at minimum wage level. In the latter you could earn more by working shifts & overtime, but if there hadn't been a minimum wage my income would have been lower.

Upon graduating, I got a better paid job which I eventually lost, & was unemployed for 4 months (sitting around stopped being fun after a very short time & I took up voluntary work), before starting a job at a lower rate which I am in now.

Funnily enough, my workplace hasn't been credit crunched as it is a depot of a very large corporation which has only very recently set up in this city, because basically it costs them less to be here than in the south-east. I am certainly thinking that I'd earn less if it weren't for this legislation. (Most people who earn less than about £18,000 a year can say the same).

Really just asking & shit out of curiosity. I have known quite a few people on low incomes who thought the same way as you, which I find intriguing as it's counter-intuitive.

LibertyMine said...

Interesting comments, unfortunately the Government plans to increase state benefits by 6% in April. Any NMW increase that does not match that (and of course it won't) will simply make benefit-life more attractive for some of our welfare families.

Mark, your 31p/£1 idea sounds interesting. I'm going to look at the figures for this. I like it. I believe in the flat-tax system based on a personal tax allowance of at least the NMW on a 40 hour week. This would take millions of the lowest earners out of tax altogether. Employers NI needs to be slashed to 5%. I think employers should make a contribution but it should be a lot smaller than it is now. I also think this is what Brown should have done in the PBR last November.

The problem is many people do not live in the real world with their council subsided low rents and benefits that increase when circumstances change.

I also favour time-limiting benefits. People should not stay on unemployment benefits for 5, 10, 15, 20, 30 years or more.

The Dog said...

What does everyone here think about the concept of a Citizens' Basic Income?

Newmania said...

Mark I am not sure I quite foloow your para 3 , of course tax credits was supposed to fix the poverty trap byt extending it upwards . It has failed

Newmania said...

British soldiers risking death in Afghanistan and Iraq are being paid about half the national minimum wage.Not a lot of peopğle know that. Least of all the legions of Housing Benefit claimants.

Nice ...IT , how nice to see you are still alive somewhere

Newmania said...

I have done lots of low paid work Asquith but not in the sense you may mean. I started work on £5000 per year.
It matters not a sod until other people rely on you.

Newmania said...

Liberty mine I don`t think anyone should pay no tax I `d love to have alook at th esuggestions in som,e detail . My feeling is that its too easy to throw around figures and what is required is a cultural change allied with greater opportunity and access to advancement

Newmania said...

Dog,.,,...we cannot afford it

Newmania said...

Feldi I think what you are saying is that any cost tends to squeeze any slack out of the system and the wekaest get squeezed .

Auntie Flo' said...

Many small companies are crippled by the escalating cost of holiday pay.

Statutory holiday pay entitlement is now up from 4 weeks to 5.6 weeks a year. And of course it won't stop there, we have to match holidays in the rest of the EU.

Small companies I supply which have around 30 to a hundred staff are under such margin pressure during the current recession that they're profits are dramatically reduced. They're either just keeping their heads above water or, in many cases, making a loss.

The production loss represented by an extra 240 to 800 days holiday in addition to that margin pressure is enough to force many small companies to issue redundancies. It will force some into liquidation. Many of them are good companies.

It's not just a case of these extra holidays taking up slack in productive capacity, many positions have to be covered even if the person is working at half capacity for Health and safety or contractual reasons.

Auntie Flo said...

"their" profits are dramatically reduced too!

asquith said...

Interesting comments there & that, about "the weakest". I have long suspected that half of these dismissals aren't directly due to the credit crunch, they're just companies taking a long-term view that they can do without certain people. They may, especially in industry, further mechanise their operations & even when their output starts to rise, they won't expand their workforce.

I suspect that some people, who had been doing unskilled jobs, will never recover from this recession as the employment that eventually becomes available will not be suitable for them.

Newmania said...

That may well be right Asquith , that is part of a development that has been going on a for a long time .
The thing is though there is alot of help if you want to "skill up" . There is not a lot more the govenrment can usefully do.People do not use it . I see this as about tailoring eduication to the economy better and treating the dependency option with the sort of terror that inflation was once treated

These are the hard drugs of government quick fixes and so hard to get off once they are in the system

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