Here’s why we must raise the minimum wage

Every now and then, a blog post really gets your attention. When they do, they are almost always about tax dodging or house prices. Sometimes gold does it too. But that’s about it. Good news, then, that we have a new subject that everyone wants to have a say on: welfare to workers.

I first wrote on this several years ago, but I picked it up again late last week as the issue of the £22bn-odd of benefits we pay to people in work came up again. My suggestion (see below) of an increase in the minimum wage as one way to deal with the problem (the higher the wages, the fewer benefits have to be paid out) hasn’t been 100% popular.

The idea is “socialist nonsense”. I have missed the point that it is the market that sets wages – any government action is unnecessary interference. Any rise in wages will cause mass unemployment. A higher minimum wage will just mean large corporations classifying workers as part-time or freelance, and encourage our nation’s “idle bourgeois parasites” to move their businesses overseas. Small businesses couldn’t cope, etc, etc. 

A lot of these arguments are perfectly good, as is the one about the problem not being wages but rather house prices. There is a view that it isn’t wages that have to go up but the cost of living that has to come down. House prices are a flashpoint for a lot of you (as they are for us).

If only the government would let house prices fall, you say, someone on the minimum wage might not need regular state top ups to his salary to support himself. The same goes for the prices of utilities, which we in the UK seem to always end up paying more for than the Europeans and Americans.

But whatever you think about the gap between basic pay and the cost of a basic standard of living in the UK, the key point is that we admit there is a problem.

It might be because our government focuses on almost nothing but keeping house prices up. It might be because our crappy currency means that we constantly import inflation. It might be because our tax system is all wrong (see my posts on the location tax). It might be because the incentive schemes our big corporate managers work under push them to cut wages and staff before anything else (see my post on Andrew Smithers’ view). Or it might just be a symptom of the fact that Western living standards are beginning a long and nasty fall.

But either way, the key point is that our economy is not able to produce jobs that pay wages that support families without the taxpayer stepping into help. That is surely telling us that something in the UK is very, very wrong.

It seems to me that whatever is causing the problem, the net effect is that the taxpayer (or the non-subsidised tax payer at least) is being forced to pay a good part of what should be the payroll costs of the world’s big corporations. We can deal with this in a few ways.

We can force companies to raise wages by cutting all benefits to workers right away. That would make it pretty hard for them to get any workers (unemployment benefits would be better), but even if they could get them, I think it would force up wages pretty quickly: would you shop in Tesco if it was clear that every shelf-stacker was slowly starving to death or spending every night sleeping in a tent in the carpark? Me neither.

Still, as short and sharp a solution as abolishing welfare in work in one go might be, I can’t see it happening (nor would I wish the social consequences on anyone).

I also can’t see what Ferdinand Mount in the Evening Standard suggests happening. He gets the arguments for a rising national minimum wage, but isn’t so sure we need to enforce it via the state. Instead, he calls for a “gradual cultural shift” in which “companies work out the solution between their accountants and their consciences”, and in which the general public shows their preferences by shopping at stores “well known for paying a living wage”. Pipedream.

What else? We could lobby the government to let house prices fall or to support rather than force down the pound. But we know they won’t. We can try and force companies to change the way they pay their management. But that’s very hard – and just as much a fiddle with the free market as anything else. So that takes us to our usual end point.

We’ve pointed out and eliminated all the impossible (politically or otherwise) solutions to this problem. And we are left with the possible. As far as I can see, that’s a rise in the minimum wage. I don’t much like it either. But there it is.

90 Responses

  1. 22/01/2013, Critic Al Rick wrote

    It’s the corrupted playing-field that’s wrong. Tinkering around with NMW is merely treating the symptoms and not addressing the real problem.

    I fear society is so corrupted it’s in one hell of a Mess; we’re well on the road to Totalitarianism. For to tackle the real problem now, TPTB, would probably create an even bigger Mess in view of how short-sighted the masses appear to be.

    Keep raising the NMW and you’ll eventually kill the Truly Private Sector and create even more Parasites.

    Bye bye Freedom.

  2. 22/01/2013, Ellen wrote

    are necessities. I know this is a separate issue, but it is one that needs to be addressed urgently. Eastern European countries have restrictions on foreign buyers of property to protect their citizens.

    UK companies are benefitting for drops in corporation tax so raising the minimum wage could be seen as a transfer the tax to wages (assuming the company are making a profit).

  3. 22/01/2013, GFL wrote

    “would you shop in Tesco if it was clear that every shelf-stacker was slowly starving to death or spending every night sleeping in a tent in the carpark? Me neither. “

    Of course I wouldn’t I’d much rather buy stuff from China and India where the employees are driving Lamborghinis :)

  4. 22/01/2013, Martin wrote

    That’s a hell of a progress Mrs Webb. From suggestion to order in one week! Well done.
    I think the MW subscription is too expensive. How about limit the MW price by law? How would you like that?

  5. 22/01/2013, Me34 wrote

    If the MW is increased would that just make the UK even more attractive to E European immigrants to flood into the UK.

    This is the real reason the UK has such high unemployment and so many people are stuck on the MW.

  6. 22/01/2013, NeutronWarp9 wrote

    If people want to sleep in the car park that’s fine, so long as the family and disabled spaces are kept free for the single, able-bodied, selfish folk to use.
    Sadly, altruism is as rare as hens’ teeth and most people will give to tigers in Asia as a gesture of their own supreme generosity whilst walking past those that live among them.
    If one doesn’t like the level of NMW, perhaps one should aspire to find something that pays more? Alternatively, let QE do its worst and then give everyone a meaningless sub-inflation ‘pay rise’.

  7. 22/01/2013, Boris MacDonut wrote

    Bit of a poor attempt to defend your very good idea Merryn. More of an apology to the Tory toffs for suggesting a socialist -lite solution.
    I have taken another look at the costings and believe £8 an hour is cost neutral, but has the secondary effects of giving the relatively poor a little more dignity and a lot more spending power.

  8. 22/01/2013, Critic Al Rick wrote

    Boris

    Have your costings taken into account the consequential raising of a lot of other wage levels in order to retain wage tier differentials?

    And the consequential rise in the cost of goods and services acting to cancel out this short lived increase in spending power; but more importantly acting to permanently reduce our competitiveness in the World?

    Oh what the hec; in for a penny…

  9. 22/01/2013, JT wrote

    Merryn, I’m curious about your assumption that if benefits were removed, workers would nevertheless continue in the same jobs even though their lower wages would thereby reduce them to homelessness and starvation. Is there evidence for this?

    Would the more likely scenario not be that those workers would either leave Supermarket X’s employ altogether in order to find better paid work elsewhere, or move to a cheaper part of the country (or the EU) where they could afford to live on the wages being offered? Would that then not force wages up as supply fell away? Would it not also force rents down as workers left expensive areas?

    I agree wholeheartedly with the principle that workers should be paid a living wage. Well meaning though it may be, I just don’t see how government intervention really does anything other than exacerbate and indeed perpetuate the problem.

  10. 23/01/2013, Mark Wadsworth wrote

    Why differentiate between “out of work” and “in work” benefits? As it happens, we could give every adult the £71 a week JSA rate in cash and abolish the tax-free personal allowance, and this would
    a) Work out cheaper than the current means-tested benefit system (and/or raise more in tax)
    b) Increase the net wages of lower-paid workers.

    For sure, “out of work” benefits discourage work and push up wages at the bottom end and “in work” benefits encourage work and subsidise or depress wages at the bottom end, but if there were a flat-rate Citizen’s Income then the two effects would more or less cancel out. So we get “market wages” while at the same time helping people on low incomes and ending the poverty trap.

    What’s not to like?

    PS, if the Citizen’s Income is funded out of LVT receipts, then so much the better!

  11. 23/01/2013, Hoofhearted wrote

    areas far removed from their initial action.

    Watch Milton Freidmans “Free to choose” (available on YouTube) to see the overall economic and social effects of raising the minimum wage or even for having one at all.

    “Stop meddling” is also the answer to the frequent asset bubbles (house prices) and the consequent hardships so many face (austerity) trying to fixed the problems government meddling caused.

  12. 23/01/2013, Papko wrote

    Of course I wouldn’t I’d much rather buy stuff from China and India where the employees are driving Lamborghinis :)

    Great point GFL ,

    I like the idea (especially as it goes against my grain ) Large companies would have to comply (it would also get more tax out those that dont pay Corporation tax here )

    It would reduce the benefit bill and therby the deficit
    Small companies would have to raise prices , and surley attract more immigrants who I expect find work here money for old rope .

    The raised wage should incentivise our residents to try harder as well .

    ps to the chap who said Money Week Subscription is not worth it ? well you get such stimulating ideas (like this one ) and its only £2 a week or so ,

    A cup of coffee does not stimulate me half so

    ;-)

  13. 23/01/2013, r wrote

    I think that @Me34 has a good point. Why do we have so many people that are “poor” or on MW? It seems to me that many are happy with their situation because they are part-time workess just making a bit of extra money. Certainly, government meddling always distorts the real picture and it seems determined to keep house prices up when they shouldn’t be. If we are talking about the breadwinner of a household being on MW, that is a different matter. I still ask, why does such a person not better him/herself? .. .. ..

  14. 23/01/2013, r wrote

    .. .. .. The more “benefits” that the government offers, the more distortion will happen in the employment market. I know our EU lovers do not approve of our closing doors to the Eastern Countries but, surely, that is where a significant part of the problem arises. If there were less people seeking employment, market forces would demand a raise in pay.

    Incidentally, I read in MW recently that we are at a PEAK of EMPLOYMENT at over 29m in the UK. Doesn’t this support my view as well?

    r.

  15. 23/01/2013, r wrote

    .. .. .. The more “benefits” that the government offers, the more distortion will happen in the employment market. I know our EU lovers do not approve of our closing doors to the Eastern Countries but, surely, that is where a significant part of the problem arises. If there were less people seeking employment, market forces would demand a raise in pay.

    Incidentally, I read in MW recently that we are at a PEAK of EMPLOYMENT at over 29m in the UK. Doesn’t this support my view as well?

    r.

  16. 23/01/2013, Neil Cleere wrote

    As an employer of over 100 staff I agree completely with Merryn. If everyone has to raise the minimum wage it will be a level playing field for all UK employers. My company has to compete with European suppliers as well as UK based ones but I believe that an increase in the minimum wage would not affect our competitiveness that much. However, I would advocate at the same time the government pegs tax free pay to the minimum wage so that people on the lowest wage gets all their money to take home. Then get rid of working credits completely. They are impossible to administer fairly and and incentive for workers to only work part-time. I believe if you put more money in people’s pockets at the lower end more will decide to look for a job instead of taking state handouts.

  17. 23/01/2013, Idont believeit wrote

    Well said Hoofhearted. When I was a young man of 21, , I could get married, buy a house on 3 time my salary, eventually raise 2 boys etc etc and have my wife not work until the boys were 17.You cant do that today.Why not? Because useless socialism has created such a burden as to destroy such hope economically.Its not meddling by government but the totality of government and bureauocracy that has destroyed the middle clas living standards and values .Todays technology allows for corporate growth without jobs.A robot costing $22K costs $0.85c per hour over 3 years.Labour cant compete, especially the sort produced by socialist minded and run universities. Flexibility, technical skills, entrepreneurship and a productive mentality that sees you need to produce more than you consume to reach wealth will provide such solutions.These qualities dont come from tinkering governments or social elites, left, right or middle. People grasping their own solutions will.

  18. 23/01/2013, Barkingmad wrote

    @Boris – you say “I have taken another look at the costings and believe £8 an hour is cost neutral”

    Depends which costs you have included or not? Easy to say – but how about some detail to back it up.

  19. 23/01/2013, Barkingmad wrote

    Does Moneyweek employ anyone on minimum wage and perhaps you should look at your suppliers – i.e. contract cleaners etc.

  20. 23/01/2013, Barkingmad wrote

    One of the problems with raising the minimum wage would be it would increase prices and the cost of living (i.e. part of what it is looking to solve) and for everyone – inflationary and would have the effect of putting upward pressure on all wages – so then what – just increase NMW again?

    Also if we increased it about 30% as people have suggested – how many jobs is that going to cost 10%, 20%, more? What of those people who are now unemployed and fully rather than partially dependent on benefits?

  21. 23/01/2013, Barkingmad wrote

    Maybe we should look at it the other way around (as others have touched on) – look to reduce taxes and the cost of living. Reduce or remove VAT on some of the things people need, increase the personal allowance or if you do increase the NMW reduce / remove employers NI to make it less expensive to employ people.

  22. 23/01/2013, Romford Dave wrote

    The stand out item in Merryn’s article is that the NMW is the easiest solution to address the ills of the least well paid. Ok she used ‘possible’ but since when has the impossible been easy?

    Despite annual above inflation increases in NMW since its inception in 1999, the low income issue hasn’t been solved, how can we solve it?

    Lets have some more?

    QE1, QE2 or QE3 didn’t work so,what should we do?

    Lets have some more?

    There’s a bit of a theme developing here.

  23. 23/01/2013, Romford Dave wrote

    Every study I’ve read about NMW, other than those commissioned by the LHSM crowd reach similar conclusions.

    It’s been successful (except where employers don’t comply – investigations into certain Asian takeaways revealed widespread non compliance)

    It hasn’t cost jobs (although hours have been reduced/bonus’ scrapped/ex gratia payments done away with)

    It hasn’t increased prices (except where wages represent a high % of costs typically found in low wage environements).

    Now isn’t the time for a big increase in NMW (except possibly for older workers with young families or regional variations to reflect local prices – although how that can be a National Minimum Wage is beyond me)

    I’ve got nothing against poor people, I used to be one, but we’ve gone from the popular Victorian pastime of laughing at lunatics, to having lunatics laughing at us as we legislate ourselves down the carsey.

    Instead of always opting for the easy solution lets try a harder one for a change.

  24. 23/01/2013, James wrote

    You have missed the p[oint that the minimum wage is in effect a tax on small businesses. It was introdeced to reduce the benefits needed for low paid, unqualified workers and instead increase the costs of retail businesses and other employers of low paid workers.

    The problem of how to reward those who seek to work instread of making them poorer if they accept work has not yet been dealt with.

  25. 24/01/2013, Kiss wrote

    Yes raise it but cut employers nic so as to not price uk plc out of business.
    Ie keep it neutral on cost for business, the exchequer will see little loss of revenue as the employee nic contrib. would make up for the loss of employers nic.
    Problem at the moment is paye employment is going out of fashion, more people are self employed or one man band ltd co’s ir35 has been largely ineffective in stopping avoidance of nic
    If we raised the min wage 13% or whatever the ni rate is and abolish ers nic a lot of the distortions in employment status would be eradicated and give a more level playing field to all players.min wage would be more living wage also? More employers would move away from part time jobs to full time if the er nic free weekly limit on pay were taken out of the equation.
    Taxing businesses for giving people jobs has always struck me as most stupid of ideas.

  26. 25/01/2013, Rajah Brookes wrote

    Totally right Merryn. I live in Devon. A girl at the pub said the other day she was advised by the job centre not to look for full time work because she’d not be able to survive on minimum wage! They advised her to go part time. She works at the pub and as a care worker sometimes having to work 18 hours on the trot if a pub shift is followed by her other job. She’s no shirker.

  27. 25/01/2013, Rajah Brookes wrote

    There’s actually tons of work out there…it’s just that people can’t afford to take it. £6 multiplied by 40 gives you £960 a month. Two bedroom houses cost between £600 and £800 a month to rent round here. Let’s say you lived on rice and beans and spent £25 quid a week on food and the same on petrol. Council tax is over £100 a month. You already have nothing left for heating or electricity. That’s why so many people are on benefits. Minimum wage simply doesn’t enable anyone to survive.

  28. 25/01/2013, Rajah Brookes wrote

    I guess the additional question raised by my breakdown of monthly costs is why is the cost of monthly rental still so high? If the minimum wage no longer supports rentals at that level, the only way landlords can still charge that much is because they are subsidised by the government through housing benefit. The alternative to raising the the MW is to slash housing benefit. Housing benefit artificially props up rental prices and the housing market at large. If the housing market corrects properly we could return to being a fairer society in which people under the age of 40 can afford them too. In addition there would be more money released to circulate in the economy instead of getting sucked directly into the banking system through mortgage debt.

  29. 25/01/2013, Sam wrote

    Mark Wadsworth, 23/1/13, 11.26 reminds me of the excellent old Liberal party idea of a negative income tax (HMRC pays you if you’re income is below the limit and you pay them if you’re above) instead of all these benefits

    Milton Freidman’s programmes (Hoofhearted, a few minutes later) knock the idea of a minimum wage on the head (it forces low value workers into the welfare system). Open borders and no state benefits until you’ve lived here for a few years wold work wonders.

  30. 25/01/2013, Daisy wrote

    Well done Meryn. You have sparked an interesting debate.

  31. 25/01/2013, La La Land wrote

    Well done Mrs Webb. Here is my list for the Government
    1.Increase minimum wage to £8.00 per hour.
    2. Taxable income threasehold should be raised to £10,000
    3. Tax heavily BTL profits and stop allowing reductions on tax for expenses.
    4. Tax earned income of over £800,000 at 85%
    5. Get rid of layers of beaurocrats in national and local government making maximum wage as a civil servant £400.000.
    6. Get rid of the House of Lords – waste of time and money and then the Honours list.
    7.Get the Fraud Squad into the EU while persuing tax evaders and closing down tax havens.
    8. Get out of Afganistan and any other conflict in the making (Mali, Syria, Algeria, Iran).
    9. Ger rid of illegal immigrants and illegal employers – the army could help there.
    10. Put up Bank interest rate to 3% to bring down house prices while allowing existing home owners only to increase length of repayments

  32. 25/01/2013, La La Land wrote

    Well done Mrs Webb. Here is my list for the Government
    1.Increase minimum wage to £8.00 per hour.
    2. Taxable income threasehold should be raised to £10,000
    3. Tax heavily BTL profits and stop allowing reductions on tax for expenses.
    4. Tax earned income of over £800,000 at 85%
    5. Get rid of layers of beaurocrats in national and local government making maximum wage as a civil servant £400.000.
    6. Get rid of the House of Lords – waste of time and money and then the Honours list.
    7.Get the Fraud Squad into the EU while persuing tax evaders and closing down tax havens.
    8. Get out of Afganistan and any other conflict in the making (Mali, Syria, Algeria, Iran).
    9. Ger rid of illegal immigrants and illegal employers – the army could help there.
    10. Put up Bank interest rate to 3% to bring down house prices while allowing existing home owners only to increase length of repayments

  33. 25/01/2013, O'Really wrote

    Worth a watch:

    http://www.youtube.com/watch?v=3h8O7V-WxWQ

  34. 25/01/2013, O'Really wrote

    Pay people more and the cost of living will rise so you have to pay them more.

  35. 25/01/2013, Romford Dave wrote

    Even this p**t knows what the problem is: -

    http://www.guardian.co.uk/commentisfree/2012/jul/19/cap-private-rent-build-council-housing

    Not that I’d agree with his view of building more council houses, nor his statist approach of capping rents.

    Limit housing benefit to match that of what average council/housing assoc rent equates to, making the bill taxpayers are asked to foot is just a fair rent, not the mortgage payment of a buy to let landlord.

    Take away the gift from the taxpayers and rents will tumble, house prices too, making the NMW more of a living wage once the stupidity of high rents is factored out.

    You only have to look at a graph of the house price bubble since 1999 to see what the problem is.

  36. 26/01/2013, Terry wrote

    sts both in manufacturing and services. This would make us more competitive and help reduce the trade deficit.
    Yes in short term there would be foreclosures but as has happened in USA the economy would recover eventually recover.The alternative is steady decline.
    The UK cannot rely on a devaluing currency to reduce trade deficit because of our high level of imports.

  37. 26/01/2013, Dave wrote

    All increases in the minimum wage have a ratchet effect on the wages levels above them thus the effect on small businesses would be catastrophic unless they were given an exemption from National Insurance! Your idea may sound fine for London based firms but not everything should be seen from a London perspective!
    Dave

  38. 26/01/2013, Jason wrote

    Quick question: are any of the previous posts from someone actually earning MW (I don’t)? It would be interesting to hear their views.

    One point voiced repeatedly is that ‘putting up wages to MW means everyone’s wages have to go up’? Why do they? Middle management aren’t underpaid. In the current climate, what middle-earner on £30K is going to demand a pay rise because the janitor now gets £8 an hour?

  39. 27/01/2013, La La Land wrote

    As it happens Jason I earn £6.50 per hour on which I am taxed at 20% because my two pensions amount to £9,800 per annum. I have no holiday or sickness pay either plus hours to suit my emloyer which means I work Saturday and Sundays regularily with no extra pay. I need to work as my savings are depleting quickly with little interest and rising heating and household bills.. I brought up 2 children on my own while working mainly full time. I am proud that I have never taken one penny in help from tax payers but even in old age I would be struggling financially if I had not saved or could not work. I did without many things to own my 2 bed home . I am not entitled to any help as luckily I have some savings still but with inflation and low interest rates I am not sure how long this will continue. Perhaps I may need to take a lodger! Still I feel lucky compared to many others.

  40. 27/01/2013, Boris MacDonut wrote

    #38 Jason is spot on. Why would the Carlos Kickaballs of the Premier League demand another £30,000 a week if the bloke who sells the pies gets a couple of quid more? But there is the chance those already on £8 an hour want a bit more.I don’t see it as having a genaeral affect at all wage levels just a modest impact on the lower paid. The point it is can be paid for by abolishing Employers Nics.

  41. 27/01/2013, Critic Al Rick wrote

    Boris, have you ever heard of the expression: ‘knock on effect’?

    Raising the NMW ripples up through the tiers of wage levels to maintain differentials – not just absolute differentials but %age differentials. OK, it doesn’t affect everybody.

    The fact that there are f/t working people who are not being paid a living wage whilst the rich get richer is an absolute disgrace and, in my mind, testimony to the corrupt status quo.

    The problem of working peoples’ remunerations having to be topped- up will not be resolved before either:

    1) the rich voluntarily disband/substantially reduce their rigging of the playing field.

    2) the poor force the rich to disband/substantially reduce their rigging of the playing field.

    3) some hybrid of 1) & 2) ensues.

    Until such time the rich will continue to pillage the rest and the Middle Classes will continue with their decline.

  42. 27/01/2013, Boris MacDonut wrote

    #41 Rick I disagree. I don’t expect much “knock on effect”. I think Merryn and I are talking about cutting out a layer of admin’. Those on £6.19 an hour are more often than not topped up by tax credits that are largely franked by Employer’s Nics. Once on £8 an hour the need for the tax credits goes. The differential for someone on say £15 an hour is the same as under the current sytem ,where tax credits top the lower wage up to £8 anyway.

  43. 27/01/2013, Critic Al Rick wrote

    Boris, in respect of tax credits, have things changed since I was an employer, 2007?

    To my knowledge, non of those I employed on or near the NMW received tax credits. If any of them had then I would have felt obliged to compensate all others accordingly – to maintain actual differentials.

    In which case, if NMW were raised and tax credits removed I, as an employer, would have been left with either:

    1) a disgruntled workforce (having lowered wages to those not on tax credits by the amount I’d have been effectively compensating them by)

    2) being personally burdened with having to pay greater differentials than I should have (in order to avoid having a disgruntled workforce).

    Others have commented about Govt interference being the creator of a lot of unfairness and problems – they’re right.

  44. 27/01/2013, Boris MacDonut wrote

    #43 Rick. In 2007 MW was about £5.20 an hour or £10,600pa. Working Tax Credits were available up to about £13,500pa and Child Tax credits to about £21,000 depending on number of kids. There were also child care supplements and the £545 a year offered to all with an income under £50,000.
    You seem to suggest as an employer you used punitively low pay for some as an example to the middling sort not to ask for more.

  45. 27/01/2013, Critic Al Rick wrote

    As an employer near the bottom end of the corrupted playing-field I was faced with real (as opposed to fake or semi-fake) competition.

    Ever since NMW was introduced any nominal increases in turnover I had were sucked into increased NMW payments. Effectively my remuneration went into reverse in real terms whilst those of my employees stood still.

    How about the remunerations of those individuals unfairly advantaged by the corrupt playing-field? They went up almost in sync with HPs!

    And I thought you, despite your apparent delusions, at least knew at whose door the blame for most of the unfairness in remunerations lay.

    If it wasn’t for those thieving, kniving, selfish b******s the country, the West, would not now be in such an almighty Mess.

    I did the best I could for my employees in very difficult circumstances. If I had been able to do better it would have made my life a lot easier, I can tell you. But I don’t suppose a mollycoddled civil servant would understand that.

  46. 27/01/2013, Boris MacDonut wrote

    #45 Rick. The thread is about saving money for the country,not whether your business failures were down to a 17p rise in the minimum wage. In 2007 MW rose just 2.8%. If labour was say a third of your overall costs you turnover must have been pretty dismal. I can see how frustrating it must be being told what to pay. Most business owners prefer to see themselves as little emperors of their own fiefdoms. When you rail against the corrupted playingh field do you include such prgressive measures as MW and paternity leave as further corruption?

  47. 27/01/2013, Critic Al Rick wrote

    Quote Boris (1):
    ‘The thread is about saving money for the country…”

    To do that one needs to go back to basics, not tinker around at the edges. As I keep saying, the problem lies with TPTB; they’re in it for themselves.

    Quote Boris (2):
    “If labour was say a third of your overall costs you turnover must have been pretty (pretty ?, I didn’t think you approved of such terminology in this context!) dismal.”

    Now that statement sums up your business acumen, and probably that of the puppets in Govt. For starters, an impressive turnover is not necessarily a sign of an impressive %age profitability, far from it. UKplc, mooted to have the 7th largest GDP in the World, has a negative %age profit. Now that is what I call atrocious.

  48. 27/01/2013, Critic Al Rick wrote

    Quote Boris (3)
    “I can see how frustrating it must be being told what to pay…”

    What is frustrating is not being able to afford to pay good staff enough to keep them/attract them in the first place. You have no idea…!

    Quote Boris (4)
    “When you rail against the corrupted playing field do you include such progressive measures as MW and paternity leave as further corruption?”

    I see any rigging of markets whether by such institutions as (so-called) legalised pseudo cartels and virtual monopolies or by Govts as corruption of the playing field.

    I see the implementation of such measures as NMW to be the result of a corrupted playing field in much the same way as I see QE to be a tool used as a result of bad governance.

    I see such as paternity leave to be a downright hindrance and blatant inconvenience to, at least, small businesses, and to be an extravagence an ailing country can ill afford.

  49. 27/01/2013, Nacho wrote

    @20. Barkingmad.
    I think the point is that the minimum wage would rise but as a consequence benefits could be cut. So overall people wouldn’t necessarily have more money in their pockets, companies would just be making a larger contribution to a workers wages and living costs rather than taxpayers subsidising it.
    The point about job losses is probably the crux of the matter. In an industry such as supermarkets where the competition operates domestically it shouldn’t have any impact on jobs. Companies that are globally mobile or have global competition could respond to such a cost increase, depending on the nature of the business I suppose.

  50. 28/01/2013, Nick Fury wrote

    This depression (to give it it’s proper title), is due to the majority of people having no money to spend and in a consumer society, this has consequences; look around. NMW should be far higher, let’s face it none of you against it have a clue what it is like to live on this amount of money; it’s not the difference, between a one week holiday and a fortnight, it’s about eating properly that week or not. Simply saying have higher aspirations and seek better wages is the voice of ignorance too. If a business can not pay staff a livable wage then I’m afraid it is not a truley viable business, not mentioning the moral issue.

  51. 28/01/2013, Nick Fury wrote

    The reason we are short of posts from NMW earners is because they are too busy working their guts out to keep this country slowly grinding along. They are like indentured slaves; just about meeting their food and lodgings costs, with no hope of a future. There are not enough ‘better’ jobs for everyone, so someone has to clean, serve and labour – be grateful they do. If we agree on democracy, it follows the biggest group are the low paid workers; women, the young and poorer educated (but not necessarily), surely then they should have the majority say in this country….they don’t, so we can see we are not in a democracy after all….power to the people!

  52. 28/01/2013, Boris MacDonut wrote

    #50&51 Nick. At last a voice of reason.
    #48 Rick. You cannot be serious.You sound like some strange Dickensian grump.Paternity leave is a gesture to gender equality and a progressive attemopt to socialise children and you refer to it as a hindrance and an extravagance.Good grief.
    You also say it is frustrating not being able to pay good staff…Is NMW a way of punishing bad staff then?
    You sound like all those folk in the pub who claim they’d have a very successful business if they didn’t have to pay taxes. I’d make a really good pop star if only everyone else was tone deaf.

  53. 28/01/2013, Larry wrote

    I have always admired Moneyweek and Merryn’s championing of free market. This is quite a shock and quite a departure from their usual message where she is suggesting more state interference. So rather then subsidy coming from the state, I would imagine the extra the MW employers have to fork out would come from more expensive products or services. In any event, why should the state decide what price to pay when a house up north can be had for £30k and one down south is £200k. If you have free market, the north could end up with more employment as low wage industry would set up there thereby removing less need for the south to subsidise the north. Surely the concept that ‘if the pay is too low, no one would do i’t is not hard to grasp so why meddle with it based on ideology?

  54. 28/01/2013, Boris MacDonut wrote

    #53 Larry. We are suggesting doing away with Employer’s Nics. A whole strata of taxation and admin. Allowing the Employer the scope to pay the poorest a bit more and the Government the reduced burden of not recycling tax as benefits.
    Your references to the South subsidising the North are mistaken. Far more Government money is spent on the South.
    FYI, unemployment benefit equates to £1.73 an hour…..so work at minimum wage offers a 340% increase in income. Min’ Wage is low, unemployment benefit is an utter joke.

  55. 28/01/2013, PS wrote

    Whilst the liberal left elite keep the immigration doors wide open(to E.U. and non E.U)and Britain has endless amounts of legal and illegal labour the only solution is a £9-£10 per hour minimum wage to UK citizens. The Capitalist rule book has been wripped up with the bailouts of the rich and asset owning classes who should now be mostly bankrupt.
    So to prevent further transfers of wealth from taxpayers to shareholders companies must pay living wages and cover all the expenses.

  56. 28/01/2013, PS wrote

    nmr should be £9 per hour.

  57. 28/01/2013, Critic Al Rick wrote

    Quote Nick Fury (1):
    “The depression … is due to most people having no money to spend..”

    The reason they have “no money to spend” is not because they are not being paid enough but because they are up to their eyes in debt struggling to pay high taxes subsidising a load of mostly poor parasites and high prices subsidising another load of parasites, rich and intermediate in the Public and Quasi Public Sectors.

    Quote Nick (2)
    “If a business can not pay staff a liveable wage then… it is… not viable…”

    Businesses in the Truly Private Sector, like the people having “no money to spend” (see above), are also being milked to subsidise loads of parasites – is that their fault?

    OK, close such businesses down and you’ll create even more parasites. Good move?

  58. 28/01/2013, Critic Al Rick wrote

    Quote Boris (A):
    “You cannot be serious…”

    Oh yes I am. You mollycoddled civil servants have no idea what it’s like running a business near the lowest end of the playing-field. You’re insulated from reality, paid from easy come – easy go money (or fraudulent money). I’ve had to fight for existence in a cut throat market, pander to whimsical customers, put up with staff protected and mollycoddled by all kinds of ridiculous legislation, worked ridiculously long and unsocial hours; the self-employed, the backbone of the country have, it would appear, no human rights.

  59. 28/01/2013, Critic Al Rick wrote

    Quote Boris (2):
    “You sound like all those (business) folk… if they didn’t have to pay taxes.”

    I was competing with businesses not having to pay VAT, paying Employer’s NIC, non-domestic rates, subsidising parasites in the CeS(pit) [Quasi Public Sector], etc. Nevermind personal IT. My businesses were well maintained, but have you seen the state of repair of a lot of small businesses? Effectively, maintenance money is being syphoned out of the Truly Private Sector to subsidise millions of parasites (rich, poor and intermediate). It’s a disgrace.

    Rotting infrastructure Boris. The country is going down the khazi.

  60. 28/01/2013, Boris MacDonut wrote

    #59 Rick. You make the politicians mistake of always seeking to persuade people, we are on the verge of apocalypse. In the middle ages it was witches,the plague,then Catholics, later still the French, the Germans ,the Russians, the Great depression that needed to be defended against. It has been ever thus. Politicians use the ploy of inventing enemies and impending doom to justify their existence……..what is your excuse?

  61. 28/01/2013, Romford Dave wrote

    When you’re running a business, the one thing you never have to do is invent enemies.

    However be that as it may, I’m still struggling with the concept that (i) increasing NMW stimulates consumer spending, when any increase is offset by a reduction in welfare benefits and (ii) how eliminating ER NI and a whole tier of admin, will fund any increase when the majority of people [circa 92%] earn above minimum wage.

    But who am I to beware of Greeks bearing gifts and having reviewed what we currently hand over to HMRC every month, I’m now in favour of the idea of an increase, as my company will become significant net beneficiaries of the abolition of NI.

    Rest assured I will vote accordingly in true self serving democratic style once Milliband and his crew decide to think of it.

  62. 29/01/2013, Critic Al Rick wrote

    Boris, you know history much better than I; for the sake of argument I’ll take what you say about politicians at face value – like, say, WMD in Iraq, even salmonella enteritidis phage type 4 in eggs. Yes, witch hunts.

    Boris, I’m unsure if I understand you correctly; are you asking what my excuse is:
    a) for allegedly inventing enemies and impending doom, or

    b) to justify my existence?

    Well, I’ll reply to both:

    a) I’m not a politician so don’t use the ploy of inventing enemies and impending doom.

    b) no excuse, I exist as I do because, unlike many, I am not of the disposition of those who think the world owes them a living.

    I’m merely patriotic and expounding my theories on the root cause of the Mess. I had absolutely nothing to do with the cause but am being penalised for it more than most.

    I might ask what excuse the Govt has for penalising such as myself. Another witch hunt?

  63. 29/01/2013, Nick Fury wrote

    I will take a leaf out of you struggling business men’s book and say if running your own business is so hard, cut throat and ‘low paid’, then simply seek alternative employment and/or advance you skill set; as you can see this statement is not only ignorant, but a smug thing to say and doesn’t really hold water. Simply saying stop doing low paid jobs is not the answer. The problem with most self employed and or business owners is that they declare their own taxes, whereas the PAYE employees have their tax taken at source and can’t get up to the shenanigans businesses do…even up to the Starbucks and Amazon level. Most have cash jobs, Sunday jobs, undeclared tills, fake and creative invoices, etc, etc, etc

  64. 29/01/2013, Nick Fury wrote

    Every citizen in a State society who is expected to live by it’s moral and legal ‘rules’ should expect the state (not just elected governments, but all it’s organisations and individuals… we the people) to provide equality and opportunity for all, irrespective of Ethnology, Religion, Sex as well as (and just as importantly) financial back ground…so, yes we should all expect a ‘good’ living from our State (and not the world generally) if we choose to participate in it, at any level…toilet cleaner to Managing Director. Otherwise, why don’t I just take what you’ve got with my Bullyboy Militia by force? By existence and definition the state has responsibilities to each of it’s individual members (or citizens in the truest sense of the word).

  65. 29/01/2013, c wrote

    Quote Nick Fury:
    “… the state has responsibilities to each of it’s individual members…”

    It appears to me that the ‘state’ is primarily concerned with furthering the agenda of TPTB. Of secondary importance is placating and bullying the masses enough to prevent civil disorder.

    The self-employed, apart from the majority being too busy to revolt, are in a minority, i.e. have no political clout whatsoever. Hence they have next to no human rights.

    I don’t deny there are some advantages to being self-employed (more to do with self respect than to do with money, I would add), if there weren’t nobody would take the responsibilities on. However, those advantages are being eroded by the year and as the hard-core self-employed dwindle so, not necessarily because of, will standards of living for the masses.

    I’d wait for 10-20 years before deciding whether anything I say is borne of ignorance and/or smugness.

  66. 29/01/2013, Critic Al Rick wrote

    Not sure what happened there but that @65. is mine!

  67. 29/01/2013, Boris MacDonut wrote

    #65 c. I’d say one third ignorance and two thirds smugness.

  68. 29/01/2013, Critic Al Rick wrote

    Boris:
    You say what you like. If anyone is complacent it’s not me. If anyone is ignorant of self-employment it’s not me.

    One thing I have learnt about intrinsically ignorant people is that they tend to see in others what they are themselves but don’t see in themselves.

    One thing I have learnt about self-employed people is that they don’t survive long in business by being complacent.

    Nick:
    Maybe more of those of the low paid who see self-employment as being a meal-ticket should give it a go. It’ll not just be the smug and the intrinsically ignorant that will quickly become disillusioned.

  69. 30/01/2013, Boris MacDonut wrote

    #69 Rick you haunt these pages like a Greek muse or Roman soothsayer. Your constant refrain ,on every subject is impending doom and disaster. It is a tired and discredited mantra.We’ve been told this lie since August 9th 2007. I don’t believe it.
    We live in a progressive and wealthy country. Infinitely adaptable and inventive. I agree the toffs have rigged the playing field,but it has always been that way.
    They despise and fear the middling sort as it offers them a rival. That is why Victorian Railways abolished second class tickets…..it reassured the toffs that there were only first and third class folk. the same folk they meet at the horse racing and in the countryside…….but not trade, never trade.

  70. 30/01/2013, Critic Al Rick wrote

    Suit yourself Boris. The World is full of smug and ignorant ‘ostriches’.

    Raising the NMW does more harm than good to UKplc.

  71. 30/01/2013, Boris MacDonut wrote

    #70 By extension lowering it must do endless godd. Where are all the siren calls (including yours) to pay the poor less?

  72. 30/01/2013, Critic Al Rick wrote

    Boris:
    As a civil servant you may not have noticed that most of us in the Truly Private Sector are getting poorer in real terms by the day. We are being sacrficed in an attempt to hoodwink the outside World that UKplc is solvent.

    But before you get all smug again by saying how wise you were to opt for the Public Sector, don’t think that this pretence will necessarily last long enough to keep you in the manner to which you’ve become accustomed.

  73. 30/01/2013, Boris MacDonut wrote

    #72 Rick .That is rather a nasty dig. I ahve sought to defend those who made legitimate career decisions many years ago, especuially in the face of having their pensions wrecked by the jealous and malicious.
    Since 2007, we have endured two 1% pay rises and three pay freezes along with an increase in pension contibutions of 5.65% and a loss of 18% of our staff. I make it a 15% reduction in take home pay,so we can be forgiven for circling the waggons in the face of your cynical abuse.

  74. 30/01/2013, Critic Al Rick wrote

    Oh, so then Boris, you are experiencing an inkling of the prelude to the so-called (by you) doom and disaster scenario which you allege to be my constant refrain.

    Makes a change for you to be circling waggons, you’re usually leading the charge of the light brigade, all guns blazing; not just the horses that are heavily blinkered, of course.

    So, how do you think this progressive, infnitely adaptable, inventive and wealthy nation will do anything other than probably just delay the expiry date of its shelf-life?

    HS2, or some other equally vain project?

    Oh, yes of course, educate foreigners on the virtues on NMW and on the arts and sciences of how to wreck an economy.

  75. 30/01/2013, JT wrote

    You really don’t know you’re born, do you Boris?

    My wife and I both work in the private sector. Since 2007 she has had a complete pay freeze and I have seen my earnings reduce by nearly 20%. Neither of us gets a penny in pension contributions over and above what we’re able to save for ourselves. When she takes maternity leave this summer she will get the statutory entitlement and no more, unlike her best friend, who works for central government and received 6 months full pay, followed for a period by full pay for only 3 days’ work. This ladies’ husband, who worked for local government for 25 years, will claim a state pension of £55k p.a. from next year, and that’s after taking a cash lump sum…

  76. 30/01/2013, JT wrote

    I’m not complaining about all this because we work hard for what is a reasonable standard of living (and we don’t begrudge friends the same), but what I do complain about is civil servants whinging about maltreatment when in reality they exist in an extremely benevolent bubble.

    If you’re really so unhappy at HMRC, Boris, come join the real world and see which you prefer.

  77. 30/01/2013, Critic Al Rick wrote

    Circle your waggons JT, I can see the dust rising on the horizon.

  78. 31/01/2013, Nick Fury wrote

    I’ve enjoyed everyone’s comments, they have really made me laugh. Sometimes we can all play devil’s advocate just for the hell of it. I admit I don’t know everything, the state I idealize doesn’t exist and we certainly don’t live in it! I think we have much common ground; us little people are getting the shaft. I’ve been self employed (I agree no easy ride) and also worked at HM Inspector of Taxes and Crown Prosecution Service, at present I’m in the private sector (hard at the moment – rights are going backwards and worst of all nobody seems to be noticing or cares!). I’ve also had unemployment at times and been made redundant 8 times. I appreciate it’s hard for everyone at times, especially now as we are all expected to pay for something that’s none of our faults.

  79. 31/01/2013, Boris MacDonut wrote

    #75 JT. One has to live with the choices one makes in life.
    #76 JT. By the way I left the old tax office 20 years ago for elsewhere in civil service. My good wife Doris however worked their until very recently…..one of the huge shedding of staff across Government Service.

  80. 31/01/2013, Critic Al Rick wrote

    I’m not playing devil’s advocate Nick,; I’m serious; maybe you do.

    So you can empathise with both the self-employed and with Boris. Nevertheless, good on yer! I feel almost certain we’d both enjoy arguing with you.

  81. 31/01/2013, Critic Al Rick wrote

    Has anyone noticed how when the going gets awkward the awkward get going?

  82. 01/02/2013, Nick Fury wrote

    When I was younger I was a believer in the free enterprise system, but unless your a multi-national Plc you will never be able to handle all the red tape and excess legislation, designed for various protection, but also to knock out the independent traders/businessmen. Although it’s still far better than working for a Plc. Unfortunately, as I get older and work for a plc, I think I’m fast becoming a socialist even heading towards a communist. In a way we are all becoming state ‘employees’ anyway (indirectly), soon we will all be on NMW and employed in the service sector or in various businesses re-selling shoddy foreign (but cheap!) goods.

  83. 01/02/2013, CT wrote

    Excessive reliance on imports and the fact we don’t produce much means the real issue here is the cost of living – rip off Britain! Raising the minimum wage does nothing to sort that problem and would actually make it worse. Have a read of this: http://thethompsonblog101.blogspot.co.uk/2013/01/why-raising-minimum-wage-misses-point.html

  84. 01/02/2013, Nick Fury wrote

    The NMW is £6.19 for over 21 year olds, think about that, you employ someone for an hour and give them just £6.19 of what they earn you over an hour. If you can’t pay more than that you are not viable as a business or a ‘zombie’ business and need to make way for new businesses, which believe me will take your place. I agree many Plc’s are taking advantage of the Working Family Tax Credit system to get away with underpaying it’s staff and as responsible consumers we should buy with our conscience. However, this will not happen universally, so we need NMW legislation. These so called essential workers can’t even pay rent/food/petrol/parking/bus fare to even get to their jobs let alone have a family or ever have a quality of life. Try it, you’ll kill yourself!

  85. 01/02/2013, Critic Al Rick wrote

    @82. Nick Fury

    Your last sentence mirrors my sentiments almost exactly.

    @84. Nick

    Here we have disharmony; whereas you state the NMW should be raised, I state a less corrupted playing-field would reduce the cost of living making UKplc more competitive. Put simply, there’s too many out there being remunerated too much and too many out there not in useful employment because of the UK’s uncompetitiveness due to too many being remunerated too much.

    Raising the NMW has the effect of making us even more uncompetitive.

    If a f/t worker is relatively poor it’s not because he’s paid too little, it’s because a lot of the relatively rich are paid too much.
    Not until UKplc has a healthy Balance of Payments Surplus will the distribution of remunerations be acceptable.

    In the meantime the UK needs to reduce its population by, I’d guess, probably 50% or thereabouts. That’ll be the day!!

  86. 02/02/2013, Lola wrote

    Drivel, from beginning to end. Wages are a price. Price is a signal. State intervention in prices always and forever messes up markets. Better to discuss the fact that living costs as so high because of state other interventions and excessive taxation that drives up the cost of living. Plus land rents- as all profits or surpluses return to rents.

  87. 03/02/2013, Critic Al Rick wrote

    There are many remunerations that would not be as high as they are were it not for the corrupt playing-field, the harbourer of pseudo cartels and virtual monopolies. These bloated remunerations being sustained by the higher costs of goods/services provided by these corrupt institutions than would otherwise be available in a truly competitive market. Nor are factions of the public sector immune.

    Anyone disagreeing with that state of affairs is either naive or has a vested interest in the existence of the corrupt playing-field.

    Furthermore, excessive taxation is mostly attributable to the existence of the corrupt playing-field.

  88. 03/02/2013, Bayard wrote

    Lola, I would at least agree with the idea of abolishing benefits to workers. This is a crap idea that didn’t work when it was first tried in the C18th (the Speenhamland System) and has never worked any time since. The benefits go straight into the pockets of the employers or landlords. The effect of the NMW is to divert more of that money into landlords’ pockets than employers. However, since it is a political truth that falling rents and thus property prices always means the party in government doesn’t get re-elected , there is unlikely to be any change in policy any time soon.

  89. 04/02/2013, Nick Fury wrote

    I think we are all correct and agree that the current system is not working, however we are all arguing our case at different points of a massive feedback system, where if we change one factor in the cycle; housing costs, NMW or excessive taxation, etc, etc then if just feeds back in time and affects the others. But what we need is more ‘even’ distribution for each member in the cycle; workers, management, profits and investor. Should the investors recieve the biggest slice, yet they do nothing, but front the money or should the workers get the biggest slice as they actually realise the product/service/sale. Materialising money from nowhere seems the name of the game now, so is investment money really worth anything, at 0.5% it seems not. It’s only hard to get free money if you’re not in the club. Where as if you’ve got some ‘real’ money it’s hard to get any real return; catch 22!

  90. 04/02/2013, Dirty Harry wrote

    Minimum wage standards feed into a benefit claiming culture for those who can claim and particularly where dependents can be claimed for. Ultimately if you drive up minimum wage levels you will also increase the black market environment for low wage activities.
    Possibly the matter could be solved by the old fashioned solution of providing means tested social housing as the backbone of any welfare arrangement and then outside of this provision what a person is willing to for for sustains their lifestyle. Its an approach that seems to work in Germany where social housing is occupied by a greater spectrum of workers and professionals and where there is much less emphasis on home ownership being the be all and end all to living standards.
    Raising the minimum wage will potentially increase unemployment as small employers struggle to meet the cost and all the associated NI and employment law baggage.

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