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Is the minimum wage holding back the UK?

Discussion in 'Politics & Economy Forum' started by sidicks, Feb 9, 2012.

  1. sidicks

    sidicks Active Member

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    There are a few vocal people who like to focus on the social or economic policies which are appllied in other countries within Europe:

    Germany's export industry and the Scandinavian welfare system being two that crop up frequently.

    One thing I only found out today is that only 18 out of 27 in the EU have a minimum wage structure and that 18 excludes Sweden, Finland, Denmark, Switzerland, Germany, Austria, Italy, and Cyprus.

    So, for example, when someone points to the German manufacturing sector as an example as to how the UK can become less dependent on financial services, the UK minimum wage might be one stumbling block to this, as it clearly provides less employment flexibility.
    :confused:

    Not that the minimum wage is all bad of course.

    Discuss....
    :smashin:


    Sidicks
  2. Kebabhead

    Kebabhead Active Member

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    Are you trying to say to encourage manufacturing back into this country we should lower it or abandon it all together based on economies such as Germany
  3. sidicks

    sidicks Active Member

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    Not at all.

    I'm just saying that:
    a) I thought the minimum wage was a European-wide policy and was most surprised it was not present in places like Germany, Sweden etc

    b) A minimum wage clearly limits flexibility when it comes to employment which can't be helpful at this time.

    I don't know enough to say any more so was hoping for an interactive discussion - particularly as to how a minimum wage interacts with the benefits system and whether this is helpful or a hindrance.
    :smashin:
    Sidicks
  4. Kebabhead

    Kebabhead Active Member

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    Without the minimum wage who would work for £2 an hour as employers could charge what they like
  5. sidicks

    sidicks Active Member

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    1) How does it work in Germany (for example)?

    2) If the net benefit of an individual's Labour was more than £2 an hour then someone else would employ them at a higher wage.

    3) Employing no-one at £6 an hour is surely worse than employing someone on £2 an hour (your figure, not mine) who might also get some state benefits?

    :confused:

    Sidicks
  6. Kebabhead

    Kebabhead Active Member

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    Paying someone less means the Government will have to subsidise more for that person to have a decent wage to live on otherwise people aren't going to get out of bed

    What is the cost of living in Germany
  7. Desmo

    Desmo Well-Known Member

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    As a small business, minimum wage would stop me employing somebody for a period of time until I was really sure I could afford to take them on.
  8. Kebabhead

    Kebabhead Active Member

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    Out of interest what do you think is a reasonable hourly rate to charge
  9. sidicks

    sidicks Active Member

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    You are missing the point (deliberately? :rolleyes:)

    There are clearly people who are unemployed at the moment because businesses cannot afford to take them on.

    The government is currently paying benefits for these people

    If businesses could take them on at lower cost then some would choose to do so, and hence the taxpayer wouldn't need to provide such a large subsidy.
    :smashin:

    No idea.
    :confused:
  10. Ed Selley

    Ed Selley AVF Reviewer

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    No it doesn't. In the same way that the introduction of the minimum wage didn't magically make some jobs worth more (so they ceased to exist or went part time), removing it doesn't automatically depress wages. The worth of something is rarely decided by legislation.
  11. johntheexpat

    johntheexpat Active Member

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    Sidicks, I'm possibly doing you a terrible injustice here, but I do feel that there is a trap out there waiting to be sprung concerning the benefits system.
    If nobody applies for the £2 ph jobs, then it may be claimed that its because the benefits system is too generous. People won't work when they can get more by not working. Which may well elicit a robust response from some.

    But you can't have Governments playing with the benefits system, to allow people getting paid a low wage to top it up with benefits to a minimum that has been deemed necessary to survive, because that will be seen as an illegal subsidy for the business.

    I don't think the minimum wage is an arbitrary figure, pulled out of the sky by beer drinking union officials in return for a no strike agreement. I think it is a well thought out figure that is the lowest amount that a worker should reasonably expect and allow them some independance from state aid. And heck, it ain't that much really.
  12. Badger0-0

    Badger0-0 Well-Known Member

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    From an employer's POV, it probably is holding us back.
    But who cares?
    I for one, don't.
    The minimum wage was bought in for very good reasons, like exploitation.
    Coupled with our abysmal benefits (Daily Mail type stories aside), it was definitely needed imo.

    You mention Sweden and I had a long conversation with a couple of Swedish lads a few months back about benefits.
    Trust me, they don't even need a minimum wage, because benefits are so high, even after they cut back.
    Yet I don't recall hearing about the Swedish economy being in serious trouble :confused:

    As for employment flexibility, I think employers have plenty of that already, what with short term contracts, agencies and temporary jobs etc.
  13. happyhomer

    happyhomer Member

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    Germany may not have a universal minimum wage (some employment sectors do), but it does have far stronger trade unions than here, which means that wage agreements are reached at a national level for a particular union's members rather than at a company level. These arrangements are legally binding and German employers do respect trade unions enough to work with them rather than against them. I have seen this first-hand as my company is German, and my terms & conditions are governed by what is agreed in Germany. I'll be honest and say that I feel I am treated far better by the company than a lot of my friends who work for British firms, although some of the things that are not allowed because they have not been agreed by the Works Council are a tad ridiculous.
    I can't speak for what happens in other countries, but it is plain to me (as ever in such comparisons with other countries) that there is a lot more than the presence or not of a minimum wage that dictates the success of a country's economy. IMO Germany never needed a minimum wage because the mindset of employers/employees/government over there is such that there is a greater level of cooperation, and there is less of a tendency to employ people on slave wages than in some other countries. There is also a strong appetite amongst Germans to support their manufacturing industry which extends to government level. My company has moved a lot of its manufacturing to China, but has kept a large amount in Germany, when it could have shut a number of sites had it chosen to. I don't believe this mindset exists in the UK or a number of countries, but I'll leave it for others to post their thoughts/experiences.
  14. Kebabhead

    Kebabhead Active Member

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    Or there are not enough jobs for three million people

    Talking of Germany

    click
  15. sidicks

    sidicks Active Member

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    Indeed you are - I'll look forward to an apology later.

    But the point stands.

    There are people unemployed because they are only worth (say) £4 an hour to a business and the business cannot afford to employ them at the minimum wage.

    These same people are "doing nothing" (in this context) and receiving benefits.

    A sensible policy would allow the firm to employ them at £4 an hour and still allow them to receive some benefits so that they are better off than before.

    If the firm is happy, the individual is happy, and the state is spending less, isn't that a win-win-win solution?
    :confused:
    Sidicks
  16. sidicks

    sidicks Active Member

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    But surely that's because the costs of labour are too great?!!

    Interesting - which means we are quite likely to see their industrial capacity become less competitive...
    :confused:
    Sidicks
  17. johntheexpat

    johntheexpat Active Member

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    How much later? :D


    Except for those businesses in competition with the employer, who would rightly claim that the state is providing a subsidy to their rivals. Because policing a statement like 'this employee is only worth £4ph would be practically impossible and open to massive abuse. The result would be that all employees are 'only worth £4 ph' and the benefits bill would therefore rocket.

    Europe would then get involved when the whole country is being subsidised by Government, and the UK would be fined massively and regulary. This would bankrupt the country which would devalue the pound, making imports like energy, prohibitively expensive, driving businesses into the ground. Mass unemployment and a collapse in living standards would ensue, followed by rioting and an anarchic free-for-all. Society would quickly collapse and we would end up back in the dark ages, ready for some extremist leader to rise to the fore to the objection of the rest of the civilised world. The political situation would decay with some speed and a nuclear armed UK would declare war on Europe and consequently the US. Iran and North Korea would join in with us and a global war would ensue. The collapse of civilisation on planet Earth would be the only outcome.
    And all for £4ph
    However, this would be very good for the reducing Greenhouse Effect
  18. Kebabhead

    Kebabhead Active Member

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    Zero unemployment at what cost
  19. sidicks

    sidicks Active Member

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    As long as it takes!
    :)

    The same option would be open to them too!

    Presumably what you really mean is that some unscrupulous firms would fire people on £6 per hour and re-employ at £4 per hour, with the worker subsidised by the government?

    And I need to think of an appropriate response to that!
    :)


    If an employee was worth £x to a business and they could be employed for less than £x then why would they not take them on.

    Surely it follows that if there is a surplus of labour (2.8m+ unemployed suggests that is the case) then the cost of that labour must be higher than the value of that labour to business or else jobs would naturally be created??
    :confused:

    Are 'all' employees now all paid minimum wage or are those that are worth more to the business, paid more??
    :confused:
    Sidicks
  20. Desmo

    Desmo Well-Known Member

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    That would depend entirely on the job but to be honest I've not given it a great deal of thought. I just think that minimum wage will put some employers off.
  21. Kebabhead

    Kebabhead Active Member

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    Is creating all these lower paid jobs with your magic forumla going to reduce cost of house prices, rents, food, energy prices

    No all you are trying to reduce is the cost of burden to the tax payer
  22. sidicks

    sidicks Active Member

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    I don't think there is anything magic involved.

    However if the individuals are no worse off and the state is better off then the cost of house prices, rents, good, energy etc is irrelevant.

    Further, if the state is better off there is scope for improved services / facilities, increased tax thresholds etc.

    If no-one else is worse off and the state is better off (and therefore has scope to do other things) isn't that a good thing??
    :confused:

    Sidicks
  23. johntheexpat

    johntheexpat Active Member

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    All 'minimum wage' employees.
  24. Kebabhead

    Kebabhead Active Member

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    Based on this logic why haven't the coalition government implemented your idea

    Maybe it's because before the minimum wage was introduced there was unemployment
  25. sidicks

    sidicks Active Member

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    And?
  26. Kebabhead

    Kebabhead Active Member

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    The state was no better off neither were individuals
  27. la gran siete

    la gran siete Active Member

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    the only thing wrong with the minimum wage is its far too low, in fact in real terms its no higher than the lowest wages in the 70s.If we want benefit recipients top come off benefits ten we must offer them an incentive either in the shape of a higher minimum wage or added benefits of some kind so that no working person lives below a certain level.This is where the marvels of redistribution would step in:thumbsup:
  28. sidicks

    sidicks Active Member

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    And yet Sweden is considered by many to be a wonderful utopia - they don't have a minimum wage...
  29. sidicks

    sidicks Active Member

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    There, corrected that to be consistent with what you really mean....
    :facepalm:
    Last edited: Feb 9, 2012
  30. la gran siete

    la gran siete Active Member

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    taxation is always "other peoples money" and that includes all of us.We all pay taxes of one sort or another .What are you on about?:confused:

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