to think gov's Youth Contract proves NMW too high

[takingbackmonday]

The gov is ploughing more money we dont have to 'tackle' youth unemployment by subsidising half of the minimum wage businesses pay new staff.

AIBU to consider this yet more proof that NMW should be either lowered or abolished. Business taxes should also be lowered. The economy's a mess. NMW is set to high.

hunty - did you see my first post? about growth?

And also about wages and people needing to eat?

It is very difficult for the small business to afford staff. You need staff to grow, but before you can grow you need to employ people, but employing people takes you to the edge of bloody bankruptcy

Add to that employee rights, so costs of getting rid of poor performers, maternity leave, etc etc can cripple a small company. Hence the massive rise in temp contracts.

With all these things there is a " beware of what you wish for" issue.

IMO the NMW could actually be higher, if there was less red tape and employee rights to money they are not earning.

Sorry, Hec - missed your first post. It is a difficult balancing act. But the current NMW does not allow people to survive without state help - if you are over 25 and have less than a set amount of income, you can claim Tax Credits even without any dependants - because NMW is just not enough to live off in the SE. Not even for a single person. So how are two NMW FT workers meant to afford to have even one dc?

for example - you run a bakery. You are managing, you are covering the bills and paying yourself a small wage. You're never going to put Greggs out of business . You know that if you employ someone, you will be able to make more products and sell more and therefore make more money.

But the person you are employing needs to be paid before the growth that is achieved by taking them on actually happens. Before the extra money that the business makes because of the extra staff and extra productivity is in the bank.

That is a dilema that faces a lot of little guys! they can see that it's desirable and has potential, but they have to have perhaps several months of expenses up front before they have a hope of seeing the benefit of the cost of employing that person.

you were a tad cross with me, weren't you?

yes, I agree. It's shit. I wish I had an answer but I strongly suspect there isn't one.

Unless...

viva la revolution!

So, Whatmeworry - you would abolish employee rights when it comes to sick pay, maternity pay and paternity pay for NMW workers? Would only higher paid employees be entitled to have these rights then, if you were 'in charge'? Because that is, well, I don't know how to describe that, actually.

Would you like to tell the Nurseries in my area that they MUST start looking after dc younger than 4mo because I am not allowed to have maternity leave? Not ONE in my town takes them below that age.

Yes, it may be a 'beware of what you wish for' situation - but would YOU not take maternity leave? Or would you go back to work two weeks after giving birth? What if you had a C-section? Or a preemie?

how on earth is £6 pounds to high when bread can cost 1.30 a loaf? when bus fare (and i dont live in london) is £4.00?

ive been a student, and lifes pretty good when you get x grand in your account 3 times year. but you wait til you have to pay for everyhting yourself, properly.

Agree wonkylegs about the NMW being a first step to civilisation. Indicators are that people are happiest when there is lower wage inequality. That is, no one gives a stuff about actual economic growth or income, what's important is relative growth and income.

A NMW is a first step towards improved social outcomes. The next step would be an income multiple cap (you're a CEO? Great, but you're limited to paying yourself 20x the lowest paid worked). Once we have that, we'll truly be on the road to civilisation.

OP, if you're a libertarian economist, your time might be better spent studying in India or the US or one of the many other countries with a minimal welfare state so you can see for yourself what fun it is for those who are not born wealthy and who have little or no state assistance.

So, Whatmeworry - you would abolish employee rights when it comes to sick pay, maternity pay and paternity pay for NMW workers? Would only higher paid employees be entitled to have these rights then, if you were 'in charge'? Because that is, well, I don't know how to describe that, actually

As I said, beware of what you wish for. There is a reason that youth unemployment and temp contracts have rocketed.

IMO very small companies of say 10 or less people should not be held to the same rules of larger ones.

Hecate, if you need an employee, your business is already at the point where it's growing enough to be able to pay them at least £8 ph.
Sometimes you need to get a loan in order to finance the first push into growth (e.g paying the employee while before the benefits of the extra staff are really felt) but if you actually can't afford long term to pay your employees, then you can't be said to have a viable business.

. Not so much cross with you, as cross with what you were saying in your second post.

I understand that it is a catch-22 situation for small business owners, who would have to employ someone in order to realise growth potential, but have to do so before the growth happens - but the thing small business owners need to realise is that the only benefit their employees are getting by being employed by them at NMW is money to pay their rent and eat. And often there are no prospects of career movement when you are on NMW. So that is where they stay for their whole working lives. Yet for the small business OWNER - they reap the benefits of any profits that are made as a result of employing that member of staff on NMW.

So the member of staff on NMW feels like they are getting the bum deal - the only reward they get for their hard work is NMW, not enough to even survive on, yet they see after 10 years in the same job, 10 years working hard for NMW, their boss getting to go on flashy holidays, or getting a new car, off the back of THEIR hard work.

Most NMW workers would LOVE to be able to take the risk of setting up their own business, but are unable to - if you haven't got savings as you have always worked in NMW jobs, no-one will lend you money to cover start-up costs, and you can't work for nothing if there is no other wage earner in your home, or if you have no family money behind you. So for a lot of NMW workers, even if they would be capable of taking the risk of starting their own business, they are financially unable to TAKE that risk.

Oh yes - lets keep young people down, so its lower than benefits. Then you can come on here hand wringing about how there are too many people claiming.

Sometimes you need to get a loan in order to finance the first push into growth (e.g paying the employee while before the benefits of the extra staff are really felt) but if you actually can't afford long term to pay your employees, then you can't be said to have a viable business.

Good luck getting a bank loan as a small business.

I agree with takingbackmonday

NMW does not raise living standards. It inflates the cost of living, eliminates jobs, and forces more of the population down the the breadline. It does not achieve some sort of socialist utopia.

Money is not wealth. Wealth is stuff - energy, resources, products. Increasing the NMW reduces the ability of the country to obtain or produce these things, because it eliminates low paid jobs which would otherwise have contributed to economic output.

The minimum wage has nearly doubled since it's introduction. So has the cost of living. If you double the minimum wage again, the cost of living at that end of the scale will more or less double (with a slight time lag). More money chasing the same amount of stuff just increases the price.

It's the same reason that housing benefit and lax mortgage criteria conspired to raise house prices by around 300% over the last decade or so. We were given more money in bigger mortgages, but what we got were more expensive houses, not nicer ones.

The issue here is cost of living, not minimum wage. If the government has a problem with too many people living in poverty, they can't fix it by throwing other people's money at them. They can only fix it by encouraging greater production of housing, food, clothing, energy, and whatever other essentials are in short supply.

Yes it's not easy to get a loan right now-an after effect of a global credit meltdown, caused by banking de-regulation.

It's shit, and really hard to be a small business at the moment, but it's also shit to be employed at slave wages.

Rolo i like your comments except 'the fix':

Housing - you would need a sizable house price fall & that would damage the economy in the different way.
Food - prices are high because of global shortages. how can you fix the UK market amongst that?

but northernwreck. I specifically said that the problem is paying them in advance of seeing the increase in money that employing them will bring in that will make employing them affordable. It's all about the timing.

And yes, you can try to get a loan, but getting a little business into debt really isn't a good idea! - even if you can get one! Banks are very very VERY reluctant to throw their money at a little business! Very high risk, you see.

I see what you are saying, hunty. if someone feels that they never have a chance of doing better, then that's soul destroying. Ideally, the business owner would take the staff with them as they grow! So the bigger and better the business - the more all staff benefit. I realise that doesn't often happen though.

See, I have experience of this. I used to run a business that employed a LOT of staff. (s/w agency) I paid them very well - compared to what other people at other agencies were getting, because I wanted the best!

Problem with that is that the customers, while agreeing that my staff were far superior in terms of training and ability, just wanted a body so they had the ratios they were obliged to have. They didn't want to pay how much I had to charge in order to pay my staff what they were worth, run the office, pay the office staff and pay me and my husband a wage - a very low wage! when they could get a blue arrow warm body in a chair for a few quid an hour!

What do you do when the staff want the high wages and the customers don't want to pay and you have to run an office?

When you get big enough that you make your money on the numbers, all well and good. But you've got to get to that point first. And that's what screws up many of the little guys.

I was on a PhD stipend until recently. It is more than minimum wage. Hope to god you're not doing a numerate subject... The main injustice of it is that you can't claim for help with childcare etc. as employed people on same wage can, but that's another issue. The minimum wage is actually a joke. What we need to do is tell employers to stop taking the piss and if they aren't going to employ people for a living wage, they can fuck off to China and we'll create a proper publicly owned employment system like civilised Scandinavian countries who aren not economically fucked.

I still can't get my head around the fact that the government has to top up the income of people working 40 hour weeks in the form of tax credits. Surely just the fact that tcs exist is an admission that wages being paid aren't liveable? I don't know what the answer is, though.

The problem is not that there is no wealth in this country, but that there is a great deal of wealth in this country but it is in the hands of a very few people and they are bloody determined to hang onto every damn penny of it.

Until or unless that changes, the rest of us will continue to scrabble in the dirt for a few coppers.

isnt it something like 1% of the population own 99% of the land? we should have had a revolution and got the land back from the aristocrats.

the thing i cannot believe is that the last tory and labour govt over spent, even when the economy was booming.

they care more about staying in power than basic balancing the books

I agree, tilly.

Most of the wealth of this country is in the hands of people who got it because their ancestors either screwed over everyone they could, - or betrayed some royal for the benefit of some other royal, - or could be relied upon to control the peasants and ensure they were good and meek little creatures who did nothing to challenge the powerful - or did some other very horrible things indeed - or just fawned and kissed arse until they got their slice of land and title.

It's in their interests to ensure that the masses remain on our knees.

As far as I can see, there's not been a massive change since feudalism! We're all still serfs and we still have our lords and masters. [cynical]

And yes, all that matters to the powerful is keeping power. Nothing is more frightening to someone who has either great power or great wealth or both - than losing it.

As far as I can see, there's not been a massive change since feudalism! We're all still serfs and we still have our lords and masters. [cynical]

I think the people had the most rights between about 1915 and a few daces after WW2 as the great unwashed were needed to fight and extracted benefits. IMO ever since the 80s the rich have been putting the screws back on.

Daces = decades. IPad.....