To think if your business can’t afford to pay employees a living wage then it isn’t a viable business?

[tequilasunrises]

I see so many posts on here along the lines of ‘my/my DHs business couldn’t afford to pay people anymore’, usually defending NMW being so low.

I think that if your business isn’t making enough to be able to pay its employees a proper living wage (ie they don’t have to claim benefits on top or live in poverty) then it isn’t a viable business?

People having more money to spend can also only be a good thing for the economy and businesses surely?

AIBU?

And that's always the fear when you're recruiting isn't it!

Ultimately this is the fault of previous and current governments of all shades.

Paying in work benefits subsidises employers. How on earth has this been allowed to happen.

I know this will never happen, but any employer whose staff have to claim in work benefits to survive should be penalised, such as paying a higher corporation tax rate (and made to pay it on all profits with no offsetting for dubious debts, acquisitions etc) and a higher National Insurance employer contribution.

Agreed

I think that could have horrible unintended consequences IAmUniquelyMe - mainly people avoiding employing single parents, or even just parents full stop

That already happens SC in some companies run by arseholes

Of course, but if you introduce an explicit financial penalty it will be worse. If your candidate choices are a single mum with three kids, an unmarried guy who lives in a flatshare and someone who still lives at home then single mum is not going to get a look in as realistically she will be entitled to benefits up to a relatively high income level vs the other two.

Forget part time roles too.

That already happens more often than people imagine, even without the financial penalties.

The answer is to make absent parents pay. That’s what it keeps coming back to.

You're completely right. Anyone on here who disagrees with their bullshit excuses is why people aren't being paid more. Gullible people everywhere

Not much to add, but plasterers and plumbers aren't unskilled workers. They are skilled workers and can often demand good wages.

Just going to leave this here.

The NMW has decimated union membership in our industry. Just an interesting fact.

@thatwouldbeanecumenicalmatter excellent.

We own a small business in the beauty industry and I can tell you now, it isn’t easy.

We employ 8 people, all of which are paid at their given legal rates or higher, we barely break even as it stands or not really much profits after VAT, NEST, NI & Tax, Stock, Rent, Business rates, Utilities and other consumables.

I agree people need to be paid a decent wage but I also know that if minimum wage increases, small businesses will get shut down and jobs will no longer be, employees don’t realise what employers expenses cost, they just see their NET income and think “this is crap” but consider the NI & Tax being deducted, consider your NEST pensions, that an employer is required to pay into, this all eats out of the employers “profits” and is relative to income, if min wage increases, employers NEST contributions automatically increase which demands further cash flow from the business.

There are genuine reasons as to why small businesses can’t increase wages. Some of you may say “well your business isn’t viable blah blah” that’s complete bs, especially within the hair and beauty industry, it is viable, we are practically fully booked all the time but even still, we can’t keep up with costs and when you factor in the time and risk involved financially, it’s not even worth it, we do it because we enjoy doing it.

Above all, I didn’t always own my own business and I have worked for other employers before, so when I say this, I’ve been through both aspects... why shouldn’t an employer or business get or be able to get a better salary or keep profits for that matter? They are the ones who put their houses on the line or take on the debt and 100% of the RISK involved which could make or break your financial future for quite some time if it goes down the pan.. some people need to think about it, if it’s all easy running/owning your own businesses why doesn’t everyone do it?

This thread makes for really sad reading.
Employees being treated so badly, incredibly badly!

@Blablahblah your prices are too low as are the whole sectors. This allows the persistence of pittance wages supported by benefits. Why should my taxes (provided as benefits subsidence to below living wages) subsidise your business profits? Why shouldn't your customers pay for that?

*subsidy

Yanbu to a certain degree but I do think that nmw should only apply to start up companies etc.
If a company is making millions in profit why cant they pay a living wage?

Completely agree in theory but of course each case is different and a blanket statement is a little unfair.

I do believe a profitable, fairly stable company which creates wealth for the owners and stakeholders have an absolute obligation to take care of their staff and to do more than the bare minimum- it is proven to be good for business overall to treat your staff well, they are your most valuable asset. Makes me absolutely sick to my stomach when profitable companies want to get away with the bare minimum- no sick policy, basic maternity, basic holiday policy and the minimum wage regardless of skill set, age or experience. They will do as little as they legally have to and I think that’s disgusting.

However we do need small businesses to be able to grow and in the early stages before profits build it must be hard to manage the staff side, so whilst they start out, their “packages” might not be that generous but you are right to say in theory if you can’t treat your staff properly then you shouldn’t be creaming profits off the top

@Hopoindown31 who said anything about my employees being on supported benefits? None of my employees are on benefits, I’d be intrigued to know what benefits a full time employee would be able to obtain that would cause your tax to contribute in bumping up their salaries? Or below minimum living wages?

Full time employment at around 40 hours per week would give you something like £1500 each month before deductions, I don’t believe anyone’s tax contributions will go to someone else’s pocket if their earning this amount each month so I’m confused to your comment.

You don’t need to mention anything about your tax contributions to me, we pay more than our fair share to aid “others”, such as income tax, corporation tax and dividend taxes, it’s far more off putting when you’re an employer, we can’t even fart without getting taxed for it.

Yes you go straight to prices, our prices are very much in line with our competitors, it’s all well and good stating the obvious but if prices were to increase by 10% and we lose 15% of our clientele because of it, what do you suggest we do? (Should I start planting some money trees now or?)

We are probably one of the larger salons in our area, which contributes to the reasons we will struggle even more, with more staff, more expenses occur, we would be much profitable if we only employed 2-3 members of staff and not have to pay VAT or any other employee related expenses but as I said before, we love what we do and also, how could you and why should you have to make 4+ people redundant when you care for them and their families, small businesses aren’t like big chains, we’re very much family.

This is a major point I’m also trying to make, with all these % nest increases, living wage increases etc, small businesses will go out of business, it’s inevitable, unless you’re a 1-3 person type business in this industry and all that will remain are the big chains and everyone working for them.

It’s sad.

Love the idea of the code of conduct for the pay gap!

Sad to see this idea cropping up yet again of the poorest paid people being ineligible to have children.

The minimum wage has also become the maximum wage for most unskilled work now and is one of the reasons there has been wage stagnation for 10 years and counting.

Proper Free Market Capitalism is supposed to be based on employers paying decent living wages which allow their employees to purchase goods and services within the economy, rather than the corrupted version of Capitalism that we have now, which is more akin to a form of socialism... for the banks, the corps and wealthiest individuals in society.

Big corps should definitely not be able to pay their employees min wage, that’s for sure. But they do, there’s your problem.

Small businesses should be supported/encouraged, not killed off because they don’t provide enough taxes to the government because that’s ultimately the reasons for a small business to go into liquidation due to these direct changes, because the government want massive franchises/chains to prosper, easy pickings for the taxman.

There are of course alternatives, make people self employed.. but that doesn’t benefit employees that WANT a stable reliable income and it would ultimately benefit the employer(s) (in our industry).

In any case, VAT shouldn’t even be in the salon/hair industry which is also a major killer for salons who are just about hitting the threshold.. imagine you just hit the VAT threshold right? Let’s say your annual profits were £10,000, you’ll be paying that £10,000 “profit” straight to the VATman and some more most probably and you’ll actually be in red because of it. Stupid isn’t it? You could be £1 below the threshold and not owe *all but £1 over and you’ll probably owe £15,000 in VAT for the £85,000 odd you’ve turned over that year, it doesn’t make sense, you’ve gone from £85,001 turnover with a potential £10,000 profit to now oweing £17,200 in VAT and £68,000 turnover after VAT. I see no “value” in that when a business is trying to expand past this point.

It's not just the cost of wages. It's also employers national insurance and pension contributions.

Many businesses run on very tight margins. Especially in their early years. More than 50% will fail even as it is.

I think it's fair to criticise large companies but I think you don't understand the SME market at all.

If the wages are so low that the employees have to get benefits / working tax credit on top (if that still exists?) that means in effect that the taxpayer is indirectly contributing to the business owner / shareholders profits. Why should I, as a taxpayer, have to contribute towards the fat cats' lovely dividends and bonuses? It's an absolute scandal.

I completely agree that if you can't afford to pay a proper living wage then you shouldn't be allowed to employ anyone.