Thursday, 6 March 2008

Making work pay...

...a 'whopping' 21 pence an hour more.

Yes, the National Minimum Wage is to go up from £5.52 an hour to £5.73 on 1st October.

Yes, it is an increase and yes, at least we now have a minimum wage. But it is far from a decent wage. Working a 4o hour week on the minimum wage would still leave you on less than £12,000 a year.

I know the UK Government is under pressure from business organisations, who are constantly lobbying for mere inflationary rises to the minimum wage. And it's not just because they are big, bad employers who want to treat their staff badly. Many smaller businesses do struggle to make a profit because of high operating costs. For labour intensive businesses like cleaning and catering companies, an increase in the minimum wage is a very significant cost to them.

I used to work for an organisation that supported small businesses, and it gave me an interesting insight. I spoke to many employers who would be happy to pay their employees more than the minimum wage, but they felt their hands were tied because their competitors wouldn't do the same (one of the major arguments for a National Minimum Wage in the first place). If everyone has to pay a certain minimum by law, then nobody is put at a competitive disadvantage by paying this agreed amount to their employees.

A large part of the problem is that employers have so many other high operating costs, which swallow money that could otherwise be invested in their staff. Surely it is to the advantage of employers, employees and society as a whole that we reduce the costs of operating a business (like those associated with unnecessary red tape), so that employers have no excuses for not paying decent wages.

I think a new 'contract' between government and business is needed. Government must reduce business costs, but employers must also pay a higher minimum wage. I don't know what an appropriate figure would be, but it would be a heck of a lot more than a 21 pence rise!

Although I recognise the difficulties faced by some employers in trying to manage wage costs, I don't think that is an excuse for the government to shy away from this issue. For it may become more difficult for some employers to make a profit with a higher minimum wage, but it is difficult for ALL EMPLOYEES earning just the minimum wage to make ends meet.

As a society, we have some very difficult decisions to make and interests to reconcile. We are constantly told that many people who are currently in receipt of state benefits don't see work as a financially attractive prospect. I wonder why? The cynics would have you believe that benefits are too high. Very rarely do you hear people point out that maybe it's the wages that are too low...

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