From the 1st October, the UK national minimum wage rises for adults from £5.35 to £5.52. There will be notices in the press from the Unions saying this is a great thing for their workers, but the rise is not enough. There will also be notices in the press from employer bodies saying that thousands of businesses will go bust because of it and the rises were calculated in an unfair manner.
I am all for the minimum wage, in that it sets a level with legal sanctions, and gives an employee a right to a wage that is somewhere near fair, however it is sad that it should be needed and also need to be enforced with legal sanction. In the learning and skills world, the mantra is that the workforce is an organisation's greatest asset. What do you do with your assets? You care for them, be that varnishing the windows on your house, polishing your car on a Sunday morning, spending a couple of hours at the beauty parlour on a regular basis, ensuring regular maintenance routines are carried out on machinery, or ensuring that living assets are well fed, kept warm enough and are content.
Paying someone a wage that you would not consider adequate for you or one of your own family does not meet the need to care for your living assets in terms of ensuring they are well fed, adequately housed and content. If the basic wage is not enough to do this, they will look for work else where or take on a second job. In the latter instance, you are faced then with workers who are not getting enough time to recuperate between shifts, who are not able to take up learning opportunities, who miss time with their families.
There are all sorts of good economic reasons for not having a minimum wage - not least the arguments about how it might drive inflation. The free market in all its natural savagery would however destabilise wage rates in certain sectors - most probably hospitality and retail. To a certain extent that can be seen in the US, where tips make up the majority of a waiter or waitress's wages.
So human nature seems to dictate that some form of protection is needed for wages, and so we have the annual round of increases. Remember when you see the CBI and Chamber notices about the difficulties it causes, that for an individual working 37 hours a week, their GROSS pay has gone up from £181.90 per week to £204.24 per week, or on an annualised basis, from £9,459 per year to £10,620. There will be tax and NI to pay on that before the individual gets to live off the rest - and in the UK at the moment, that is hard.
Its a funny thing that has slipped from the collective memory, supply side economics. Ken Livingstone when he first gained control of the GLC, took a hopelessly bad London transport and turned it round by dropping the fares to a flat 10p on the buses. The empty buses with no passengers paying a high fare, suddenly became full of people paying lots and lots of 10p fares. Result:- profit. Thatcher also dropped the rate of income tax to a level where people were inspired to work more. More work, more pay,- more revenue for HMG. Today though, this simple truth seems to have been forgotten by management. They see wages as an unacceptable drag on the bottom line, thus on their bonuses. You only have to go into any supermarket in the UK to see dozens of poorly trained, poorly paid youths idling their lives away by not stacking shelves. So they don't do the work, so you need to employ more. If you were to actually make these people enthusiastic (training, pay and a sense of worth), they would work harder, earn more but you need fewer people. Result, - profit.
But modern British Management only has eyes for this years bottom line and so will retain this highly focused and ultimately flawed philosophy until it is too late. The alternative, pay fewer people more money and give them training, with the objective of employing fewer better staff, (while it is the best way to increase profits sustainably), is I fear far too adventurous.
Still the current way of doing business, although inefficient, is good for the unemployment figures.
Posted by: Norris | 10/01/2007 at 01:34 PM
You are right, Norris, better trained people treated with dignity, will generally work more productively, and thus improve the bottom line.
Or that is the theory at any rate!
Posted by: Jane Holland | 10/01/2007 at 04:33 PM