Morning Line: is the minimum wage rise enough?

Or does the question, long debated, miss the point entirely; can the same minimum wage apply in London as it does in Cornwall?

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by Chris Marshall on Oct 01, 2010 at 12:00

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Morning Line: is the minimum wage rise enough?

That a 2.2% wage rise can be disputed when it is less than half the rate of retail price inflation is telling of the dire state of our economy.

The national minimum wage has risen to £5.93 an hour from £5.80. It will also apply at a younger age, 21 rather than 22 and above.

There are a set of lower rates for younger people and these are also rising. In particular, the government has for the first time set a minimum wage for apprentices under 19 years old – of which there could be increasing numbers as university becomes less of an option.

The government claimed the increases were ‘appropriate for the economic climate’.

But the business world warned against further rises. ‘Even a small increase in 2011's minimum wage could choke off retailers' vital potential to create new jobs,’ British Chambers of Commerce director-general Stephen Robertson told the BBC.

The BCC argues that the increase in the minimum wage, at 2.2%, is unfair when private sector wages are virtually flat.

Critics of the minimum wage argue that it prompts firms to cut jobs, and reduce the hours of work for staff. Higher paid employees will also seek a pay rise to ensure the same pay differential remains, they argue.

Conversely, the TUC’s Brendan Barber said that ‘despite scare-mongering from some business voices’ the economy could easily cope with such regulation.

All arguments considered, there is not much concrete evidence either way about the benefits or otherwise of the minimum wage, which was introduced by Labour in the face of Conservative opposition.

And if business groups are concerned about such small rises, they should be wary of the growing power of Ed Miliband, the new Labour leader, who has said that he would seek not only minimum wage rises, but a ‘living wage’, which could be in the region of £7 an hour.

Perhaps Miliband is right; after all if the amount the low-paid take home was increased enough then we wouldn’t have to spend as much subsidising their income with state benefits.

Or maybe the one-size-fits-all approach is entirely wrong.

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6 comments so far. Why not have your say?

We always talk as if we can do what we like in these matters without it affecting our position on the global markets. In main competitor countries, e.g. India, they do not have a minimum wage at all, but this is never taken into consideration. Of course I am not advocating that conditions for workers here should be like in India, but we do have to strike a note of realism, our industry does have to compete on the world market if it is to earn money for this country, that is a fact of life.

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@Alice re: "if it is to earn money for this country" - except those at the bottom of the pay scale you've argued.

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but then the jobs are flowing out as a result of the lack of trainees requiring to be paid sums they are worth for a while, while they are being trade, or help local firms compete with others abroad who do not have to comply with our legislation.

The minimum requirements are driving the jobs abroad, or the need to import the trained labour we have lost because it is too expensive to teach the necessary skills, making immigration essential.

I suppose the next extension is that we will pay students for learning, and then we will pay the fees of the foreigners who come here to learn.

Economics of insanity. I understand the basis of the thinking, but if you overburden industry/private enterprise with costs, they will go foreign, and we all lose out.

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re minimum wage ' having just been made re dundant ,and not eligable for redundany pay forced into taking minimum wage :-up at 4.30 am to get to work for 6am ,home at 2.45pm £35 per week in fuel for a take home pay £160 let me tell you it doe,s not leave any think left after the bills are paid

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I'm alright Jack bugger you, this seems to be the attitude of all except George. I wonder if they will feel the same when their job goes.

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Ladysaver

Oct 05, 2010 at 01:44

We do have to compete but with the minimum wage we are talking about the very lowest-paid jobs in the economy - it is only in the lowest-paid part of the jobs market that the minimum wage applies. I'm no Nu-Lab Luvvie but it does not make sense to pay some people so little that they need to fall back on benefits to survive. Do the arithmetic and figure out how someone working 50 hours a week on a minimum wage could support a family with two children. The answer is he or she can't - but falls back on benefits, and there is something profoundly uncomfortable about the notion of the taxpayer subsidising the profits of e.g. McDonalds. And minimum wages apply to people who do work, and often work very hard, not workshy benefit scroungers. If minimum wages were better, there might also be more incentive for the 'benefit professionals' to get off their butts and get a job.

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