I have downloaded a link to the BBC today which covers the government's announcement of a 6.2% increase in the "living wage".
https://www.bbc.co.uk/news/business-50947097
Here is my quick comment :
A living wage is an honourable objective. The reality is wage increases like this - 6.2% (3 times the rate of inflation) - in the sectors they really affect ( like shops, care, hospitality etc) are businesses that are already struggling. Unless these businesses can increase their prices to compensate many will either go under or reduce their wage costs by reducing their work force. So the real practical effect of this type of enforced increase is increased prices (so no net benefit) and/or increased job insecurity. Brilliant !
So why are the Government doing it? The answer lies simply in "politics". Actually in "The Thick of It" type politics. It is political expediency - like referring to it as A Living Wage rather than what it is - the Minimum Wage. (note the Labour Party were promising even bigger wage increases in their xmas sweeties manifesto). Unfortunately too many of the electorate do not understand the issues involved. They think they will be better off. Sadly they won't be. And the damage done goes further than that. These wage increases are inflationary. The will put up the price of our exports and make goods manufactured here more expensive to sell abroad and they diminish the buying power of savings and pensions.
The only way we will ever be able to pay ourselves a REAL living wage is by increasing our Per capita GDP and make sure it is shared out reasonably fairly.
One major component holding our production rates back is our infrastructure. We are gridlocked. It costs businesses billions. Why is our infrastructure gridlocked ? - mainly too many people in a small country.
Brexit may give us an opportunity to plan better and only bring in people that we actually need.
https://www.bbc.co.uk/news/business-50947097
Here is my quick comment :
A living wage is an honourable objective. The reality is wage increases like this - 6.2% (3 times the rate of inflation) - in the sectors they really affect ( like shops, care, hospitality etc) are businesses that are already struggling. Unless these businesses can increase their prices to compensate many will either go under or reduce their wage costs by reducing their work force. So the real practical effect of this type of enforced increase is increased prices (so no net benefit) and/or increased job insecurity. Brilliant !
So why are the Government doing it? The answer lies simply in "politics". Actually in "The Thick of It" type politics. It is political expediency - like referring to it as A Living Wage rather than what it is - the Minimum Wage. (note the Labour Party were promising even bigger wage increases in their xmas sweeties manifesto). Unfortunately too many of the electorate do not understand the issues involved. They think they will be better off. Sadly they won't be. And the damage done goes further than that. These wage increases are inflationary. The will put up the price of our exports and make goods manufactured here more expensive to sell abroad and they diminish the buying power of savings and pensions.
The only way we will ever be able to pay ourselves a REAL living wage is by increasing our Per capita GDP and make sure it is shared out reasonably fairly.
One major component holding our production rates back is our infrastructure. We are gridlocked. It costs businesses billions. Why is our infrastructure gridlocked ? - mainly too many people in a small country.
Brexit may give us an opportunity to plan better and only bring in people that we actually need.
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