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Benefit Cuts + Bedroom Tax - Is Minimum Wage Next?

ProfilePosted byOptionsPost Date

OneFootInTheGrave

OneFootInTheGrave Report 2 Apr 2013 07:26

We have had cuts & the freezing of various benefits and the introduction of the Spare Room Subsidy the "Bedroom Tax" so could they now go for the jugular and freeze or cut the minimum wage?

I ask because it has been reported that the minimum wage for millions of people could have to be capped or frozen in future if it risks damaging jobs or the economy, the Government has said.

It has told the Low Pay Commission, which sets the minimum wage, that it must formally consider its impact on “employment and the economy”, before agreeing future increases.

The change, which will be written into the Commission’s new terms of reference, raises the prospect of the first ever across-the-board freeze or cut in the minimum wage for everyone if the economic uncertainty continues.

http://www.telegraph.co.uk/news/9965039/Minimum-wage-could-be-frozen-or-cut-if-it-starts-to-cost-jobs-or-damage-economy-Government-suggests.html

RolloTheRed

RolloTheRed Report 2 Apr 2013 08:15

Low pay is not helpful to growing an economy, far from it. It is a bad thing.

It discourages employers from making optimal use of its work force.
As a dozen can be used when half would do little point in training.
Discourages capital investment.
It encourages unskilled immigration.
Low wages at the bottom drag down wages right across the spectrum and tends to cause highly skilled people to emigrate.
It depresses demand for value products and encourages cheap naff imports.
And so on and on ... i,e, the symptoms of a typical third world economy.

The other side of the low minimum wage is of course the tax credit which is not a welfare benefit but a subsidy to employers.

Having entrenched the economy into a low skills setting - all the political parties are guilty - it is not so easy to dig it out again. Doing so is essential to restore growth, the only real world way of cutting the fabled deficit dragon.

Labour give lip service to this need but in practice ignore it which is why they find it so hard to grown their voter support. The Tories don't care 'cos they have found other ways to make money - privatising no longer needed social property on London and the new Health Commissioning boards for example. ATOS, 4G ....

Successful companies do not pay low wages - just look at the bonus paid by John Lewis to its staff at bottom levels for instance. £ 2000 and up. Coop £ 200. Tesco nil.

Somehow several vicious circles have to be broken but it is not obvious how or who or when. It is obvious that the Geo OSbourne show has no idea though.

Dermot

Dermot Report 2 Apr 2013 08:26

Of the thousands of political excuses, few really count for much.

OneFootInTheGrave

OneFootInTheGrave Report 3 Apr 2013 09:38

Hmm "they cannot not guarantee it will not be frozen" I hate these ominous statements :-|

It is reported that Downing Street has moved to calm fears that the basic hourly wage for everyone would be cut because of complaints from small businesses that they could not afford it, but could not guarantee it will not be frozen.

Number 10 insisted the wage will not be cut, but could not give assurances on whether it will be frozen. One source said: “We are not going to cut the minimum wage.”

http://www.telegraph.co.uk/news/politics/9967637/Minimum-wage-will-not-be-cut-Number-10-says.html

Mayfield

Mayfield Report 3 Apr 2013 12:21

Trouble is even with a set minimum wage there are so many working in the Black economy, many of them illegal residents that have no choice but to work for bed and board, you can never make it stick. Cheap labour will always undercut it.

How many here have had a driveway laid or roofing done and paid cash to avoid VAT? Trouble is the government does not only loose the VAT (which I have little sympathy with since the put it up to 20% while we are all facing a cut in real income terms) but chances are the firm doing it is employing underpaid workers and also paying no income tax, national insurance or public liability insurance.

Employees and owners may be claiming benefits at the same time as sure as eggs are eggs if they are not declaring income they will be.

I don’t want to see a police state but until we have a joined up system where someone is caught say committing an offence while driving a builders van, or comes to the attention of any authority at some place of work the details are passed on to interested parties like immigration, the revenue and benefits office and they all investigate it, we are dead in the water.


Rant over (for now)

Mayfield

RolloTheRed

RolloTheRed Report 3 Apr 2013 17:29

The best option with the minimum wage is to do away with it altogether.

Although it seems like an attractive idea the actual overall effect of the minimum wage is to drag earnings down - that is the main reason why there has been so little opposition to it from employers.

In particular a minimum wage drags down semi-skilled earnings quite a bit and it is the lack of spending power for these workers which more than anything accounts for the lack of growth.

Firms with poor productivity / profitability are terrified at the prospect of the minimum wage being removed. They are the ones yelling for it to be frozen.

Freezing it is the worst of all worlds so I guess that is what this bunch of numskulls will do.

The other side of the coin are tax credits which should go too as they are no more than subsidies to employers who would have to pay real wages and get back to wage bargaining with the unions something many managers have never had to do.

You can easily see how min wage / tax credits skews the labour market by the way convenience stores are sprouting like mushrooms.

I don't suppose the idea of removing government labour subsidies altogether for employer and worker alike would be very popular.

It will happen with a mix of grandmother's footsteps and lurches whichever party is in power. Such subsidies are just too expensive.