Increasing minimum wage is not the long-term answer
Is there a comparison between the minimum wage increase (MWI) and the Christian mantra of forgiveness, saying to the man with the sword who has just stabbed you, “I forgive you for you do not know what you have done” - and then he slices off your head?
Once upon a time in the industrial world, rises were permitted when productivity/efficiency agreements could pay for them. These days, politicians of all colours are waving the Minimum Wage Increase banner in the light of social benefit (and votes). I believe this MWI is not the answer. I perceive that this is a reaction to the disgusting, immoral difference in earnings between those in the boardroom and those at the bottom of the pile.
It is the cabal of the “like minded”, voting increases, bonuses and share packages on top of extraordinary salary schemes for one another that are in need of urgent governmental attention and not the current wave of patronage bestowed on the minimum wage earners. Perhaps there is a lesson in that certain religions still exercise a moralising effect on politics and their influences – or their ability not to be influenced.
Does this progressive minimum increase work for the percentage of the population who qualify? I have my doubts as to the value of this even in the short term. My logic is based on the application of the MWI and it’s ramifications.
Employers with the qualifying people have to find the money to support this rise plus the linked N I increases and the pensions contributions et al.
Depending on the product profile of a particular industry, the percentage of the subject labour will vary and so the internal budgetary impact will change from ability to absorb the cost to a position of refreshed fiscal management. This may take the shape of staff reduction or product price increase. Remember, this wage rise impacts the entire employment community – education – schools employ many of these qualifying workers, administration, industry, supermarkets, care workers, local councils, bar staff at the local pub, the list is endless. Wherever this rise goes and there is no productivity growth, there has to be a negative impact on the paymaster and his attitude to the aforementioned alternatives. Over a five year period the promoted minimum wage increase envelope looks to be attractive. With normal inflation the attractiveness is less glossy. The commodity price increases seen in supermarkets and other staples suppliers contribute to the erosion of the effectively of this monetary gain and with the help of currency fluctuations (wrongly attributed to Brexit due to an already over inflated sterling value quoted at 15 per cent), fuel and other basic amenity costs will do nothing in the long run for the life style of the low wage earners.
Further claims to the existing MWI program profile being inadequate and calls for more radical increase in this profile will have no constructive effect in the long term –- except contribute to inflation.
The answer has to be in national productivity improvements which will introduce the self generation of income across the board and, in effect, burn this politically influenced banner.
Easier said than done.
Alan Baguley, Walcot
