Advanced search

Or just a bit thick when it comes to introduction of living wage?

(33 Posts)
Unacceptable Sun 01-Nov-15 12:20:22

Having been lucky enough to be part of a few heated discussions about tax credit cuts recently, I've finally found a way to shut up those who insist if only my family and families like mine worked harder we could make up the difference and not have to rely on credits anyway.

The living wage is introduced first.
Once that is in place an awful lot of families immediately earn enough to live without the tax credits anyway.
After a couple of years the threshold is then lowered.

So many indignant, pissed off, why-should-my-taxes then just say "well yeah, that could work"

Obviously, these poor hard working well paid people might just be leaning towards the left a little but it has got me thinking.
Why wasn't it done this way around?
Is it just much easier to cut credits first and introduce a living wage years later?

i can't quite get my head around why it's cuts first and living wage later and I thought I was fairly intelligent

Can anyone tell me why that way round is a bad move, why it isn't workable?

maggiethemagpie Sun 01-Nov-15 12:43:22

...because the tories are bastards? I agree with the principle of employers paying enough for their workers to live in, but there will be repercussions. I work in HR for a low paid sector (retail) and we won't be able to afford to pay everyone the living wage. We will have to have the same amount of work done with less people, there will be redundancies and for those left an increasing workload, stress, burnout etc. And we're already very lean on staffing as it is. I'd imagine a lot of low pay sectors will be the same. So it will create as many problems as it solves.

Theoretician Sun 01-Nov-15 12:48:14

As far as I know the living wage is not going to completely offset tax credit cuts. I haven't really been paying attention to either issue, but I think the figure I heard is that it is only going to compensate for a quarter of the loss.

Unacceptable Sun 01-Nov-15 12:51:36

So the living wage creates a real problem for some businesses maggie?
so neither living wage nor tax credit cuts are going to solve any problems for low earners?
Both are going to be rolled out though. I guess we're just screwed.

Maybe we'll end up in a workhouse or something?

maggiethemagpie Sun 01-Nov-15 13:01:30

unacceptable - It will create a problem for lots of businesses whose business model is built on cheap, lean staffing. We will be looking to cut staffing costs to offset against the higher wages, the only way this can be done is through restructuring ie redundancies, if lots of other businesses do this there will be a labour glut for those industries... I would rather be in work and low paid than out of work and unpaid.

I wholeheartedly agree that workers should get a living wage, and that they should be paid enough not to need a government subsidy, but it will take a while to have the intended effect and some casualties along the way.

nebulae Sun 01-Nov-15 13:11:21

In that case, those businesses that are built on cheap staffing costs are unsustainable and ultimately will probably fail. They don't deserve to succeed if they can only operate with what is effectively a subsidy from the tax payer. If the business can't afford to employ sufficient staff and pay them a reasonable wage, then they're unsustainable.

NotSayingImBatman Sun 01-Nov-15 13:17:20

There'll be a ripple effect through every organisation as well.

Let's say X currently earns £10/hr for a skilled, professional role. Currently, he earns a little under double what Y earns stacking the shelves for NMW. When the £9/hr minimum wage kicks in, is X going to be willing to do the skilled role for only £1/hr more? Doubtful.

So, companies

Dollymixtureyumyum Sun 01-Nov-15 13:24:02

I totally agree with not saying in batman.
A lot of people are suddenly going the find themselves earning the minimum wage but doing a lot harder job then other people. Companies will have to give people rises accordingly so it not just the living wage they will be having to provide but they will have to put workers on a higher tear up as well.
I work with adults with disabilities and I would be very naffed off of I ended up on the same wage as a new inexperienced unqualified carer when I do a much harder more stressful and in some cases dangerous role.

bloodyteenagers Sun 01-Nov-15 13:27:47

It's not just private companies that pay low. Support staff in schools including ta's woth 1:2:1 pupils. Local government. Some
Caretakers etc.

Are all on low wages which will be boosted to the living wage. So are facing redundancy as a result.

But even with the living wage, families will still need support because of crippling rent costs.

ItsAllGoingToBeFine Sun 01-Nov-15 13:32:12

Just point out what the government is calling a living wage, isnt actually the living wage. It is an increase in minimum wage to an amount less than living wage.

The current living wage is £7.85ph/£9.15ph (London)

The UK governments version of a living wage will be £7.20ph if you are over 25.

yeOldeTrout Sun 01-Nov-15 13:42:12

We moved into a bizarre parallel universe where the Tories who used to say that too high a minimum wage would reduce business competitiveness & lead to job losses, now say a Living Wage is a marvellous idea to reduce public spending esp, while the left wing press sounds huge alarm bells.

Local Authorities won't be able to pay for Social care.

Budget retailers will raise prices & lay off staff : venues which are, after all, where most of the low wage earners shop & manage to buy what they need.

I think this is one of my fave articles, too.

The thing about tax credits is that they redistribute wealth from the rich to the poor. You don't get more progressive than that.

Fidelia Sun 01-Nov-15 14:22:04

Cynical me thinks that the Tories did it this way round so that everyone feels a lot worse off, then the living wage comes in, people feel better about the Tories and, yes, oh ,look, it's time for the next election....

rageagainsttheBIL Sun 01-Nov-15 14:25:42

Surely a big part of it is a money making exercise?

Pay less in tax credits, but no extra JSA etc for people by delaying the inevitable redundancies when living wage introduced by businesses relying on cheap labour, oh and keeping your company owning pals happy for longer till you find a way to give with one hand what you take with the other (corporation tax, inheritance tax, not closing avoidance loopholes, anyone?)

= big bucks for govt.

They've got to find that £12 billion from somewhere don't they?

So poor people will bear the brunt and be even poorer for some time. Or out of work.

Oh and now it's so easy to sack someone expect loads of 24.5 year olds to find themselves suddenly out of a job come the NMW rise...

Mistigri Sun 01-Nov-15 14:26:12

As I understand it, the living wage (the real one, not the Tory version) is calculated based on people claiming the benefits (including tax credits and housing benefit) they are entitled to. So presumably the "living wage" will rise once tax credits are withdrawn.

It is of course true to say that raising wages will take some people out of tax credits or reduce the amount they get, but this is probably more true of single working people, and less true of people on low wages supporting dependants. The latter category are always going to need some form of state support at least while the cost of housing remains so high.

rageagainsttheBIL Sun 01-Nov-15 14:27:19

In that case, those businesses that are built on cheap staffing costs are unsustainable and ultimately will probably fail. They don't deserve to succeed if they can only operate with what is effectively a subsidy from the tax payer. If the business can't afford to employ sufficient staff and pay them a reasonable wage, then they're unsustainable.


Dragonsdaughter Sun 01-Nov-15 14:32:34

As above if the tories want capitalism to really work they need to let crappy businesses adapt or fail.

Cornettoninja Sun 01-Nov-15 14:34:46

Yanbu and make sense to me. Personally I'm confused about why living wage is being branded as something completely different to minimum wage. Is this so its easier to remove/reduce when it becomes obvious it's unenforceable maybe?

Just as an example, the living wage target, wipes out a good band and a half of nhs workers. There's no way the countries biggest employer can afford pay rises like that. So what happens? I know there's the school of opinion that'll chalk it up to the overall winding up of the nhs, but it'll hardly be subtle.

IMHO, they need to keep out of wages and concentrate on cost of living. The three biggies, housing, fuel and childcare. It those were capped/controlled to match real earnings then tax credits could be removed and people would stand a chance of becoming self sufficient. Rises in wages will simply raise the price of everything else.

Only then can the subsidisation of corporations low wages be tackled properly without placing the burden on the workers.

Dragonsdaughter Sun 01-Nov-15 14:35:44

Get big businesses to pay their taxes and put money into things that generate well paid jobs, build loads of good quality eco friendly social housing that will not be sold off on the cheap but will bring down buy to let rents and make life on real wages livable in the long term

NotMeNotYouNotAnyone Sun 01-Nov-15 15:39:09

The living wage thing is a feel good sounds good thing to come in before the election.

As PP have said, many companies can't or won't pay increases wage costs so will get rid of staff, many of whom will be on temporary contracts or zero hours or otherwise not entitled to things like redundancy pay.
It squashes the gap between min wage and above min wage low earners. I earn above the min wage but my company isn't going to pay us all more to keep us the same distance above min wage as we are now.

If min wage is higher and average wage follows (even if only statistically because the bottom end had increased slightly), cost of living will increase accordingly, rents, childcare (to cover increased staff costs because they will still have to meet ratios so unlike other businesses can't just reduce numbers of staff), etc

I don't know what the answer is. Yes we want people to work, yes we want to be fairly paid for work. I think a culture change in business needs to happen first towards a more socially responsible attitude. Yes they are profit making entities but they can't function successfully without their employees. Tackle corporate tax avoidance first, stop this thing of government being afraid to offend big business.

yeOldeTrout Sun 01-Nov-15 17:14:46

If the business can't afford to employ sufficient staff and pay them a reasonable wage, then they're unsustainable.

Do you mean agriculture, local authorities, restaurants, schools & the NHS, who have plenty of low wage staff? Well, the Tories did want more market forces at work in education & NHS especially.

23% of low paid workers are in the public sector, and 6% are in community services = includes care work in the private sector, Graph 2.

ZanyMobster Sun 01-Nov-15 17:52:49

I am involved with a pre school where most of the staff are qualified to a maximum of NVQ L3 and work low hours term time only. We have always paid similar wage to other pre schools and nurseries in fact sometimes more. The big rise from the current minimum wage to living wage in April is going to put huge pressure on us as we pay the assistants (unqualified, irregular hours) minimum wage so everyone else needs to be paid much more to ensure there is a fair difference.

Given the fact the government only fund us less than £4 ph per child means we have very little options to increase our income, this funding has also only increased by a few pence over the last 5 years but minimum wage has risen by several %. We are a charity, community pre school and it will be a huge cost pressure, along with the additional pension cost (albeit small to begin with).

I don't see how we don't deserve to succeed but the government seem to be ensuring we don't!

JeepersMcoy Sun 01-Nov-15 18:12:34

I work in local government. The Tories have cut funding hugely forcing the council to save millions. Part of the plan to make those savings is cutting the amount paid to care agencies.

There is a huge concern that agencies providing carers will just collapse when the min wage comes in. The council simply does not have the money to pay more so the agency can't pay more.

As others have pointed out a lot of low paid work is in the public sector and the money just isn't there. The Tories are taking money away with one hand and then increasing costs with the other. The only result is going to be less carers, less teaching assistants, less jobs.

I am a supporter of having a real living wage (which this isn't by the way), but it must be funded appropriately in the public sector or it will effectively cut jobs as well as reduce access to vital services for vulnerable people.

Brioche201 Sun 01-Nov-15 18:28:49

The living wage is a time bomb for the next government

Dragonsdaughter Sun 01-Nov-15 18:38:14

If the lowest are paid more there will be more money in local economies as they are the people with no disposable income at the momemt and this would in turn make more businesses viable without tax payers subsidies via tax credits. Plus cut the enormous bloody adminadmin bill accociated with them, leaving money to be used else where. Plus if people could pay their own rents rather than being made to rely on 'handouts' of what they should be earning in a balanced economy anyway then housing benefits would be vastly reduced. If enough social housing were built then buy to let's and in turn rents and the housing market would come gradually to a realist level ( except probably London)

Unacceptable Sun 01-Nov-15 20:06:06

I've read all the posts a couple of times and am none the wiser about how any of this is good for our society. I can't see how people are going to afford the basics whether it's credit cuts first or living wage first.
I am however, totally and utterly depressed.
I think it's safe to say our family, and many others, are going to find the next few years increasingly difficult.

Join the discussion

Registering is free, easy, and means you can join in the discussion, watch threads, get discounts, win prizes and lots more.

Register now »

Already registered? Log in with: