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Is the minimum wage a living wage? If not, why not?

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Is the minimum wage a living wage? If not, why not?

Post by sickchip on Wed Jan 04, 2012 2:40 pm

First topic message reminder :

It seems companies don't pay a living wage so the state tops it up with various benefits - this in effect boosts companies profits (government doling out our tax to their profiteer friends?). So just who are the real benefit leeches.....I would suggest the employers using the state to top up the meagre wages they pay - not the employee who has no choice but to claim these benefits in order to survive.

Therefore the benefits system is there to make companies, and the rich, richer!
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Re: Is the minimum wage a living wage? If not, why not?

Post by Mel on Thu May 31, 2012 8:33 am

Good point OW.

This is one of the very reasons why bank lending is stifled at present. Not many businesses who require bank loans work on the basis of what you say "Employers must aim at a productivity level of 8x pay in order to make it profitable to employ a person. " Difficult but necessary for a business to survive let alone gain access to bank lending facilities, especially in this particular poor economic climate.

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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Tue Jun 12, 2012 10:40 pm

Evidently the plan is to employ large numbers of temporary staff at the Olympic centre on the basic wage, which flies in the face of convention whereby casual work is compensated for with enhanced pay.
Some elderly residents of London's East End will recall dockers having to line up every day for selection by "Gangers" for one day's work at a time.
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Re: Is the minimum wage a living wage? If not, why not?

Post by Phil Hornby on Wed Jun 13, 2012 11:09 am

Some of us, to this day, sit waiting expectantly for the 'phone to ring with an offer of a day's hard labour at a meagre fee . On some occasions it is difficult to find a credible excuse to turn down the kind offer of an opportunity to seek to unravel another's management 'accident'... Very Happy
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Re: Is the minimum wage a living wage? If not, why not?

Post by bobby on Wed Jun 13, 2012 4:12 pm

The only job worth having in this day and age, is that of an assistant Consultants, consultant.
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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Wed Jun 13, 2012 5:36 pm

bobby wrote:The only job worth having in this day and age, is that of an assistant Consultants, consultant.

Especially when you can make a couple of days actual work extend to a month of steady income, by the provision of advice incrementally. (Known within the profession as the "drip-feed" reporting strategy.)

E&OE. Information is provided in good faith without prejudice or personal liability, and may not be subject to litigation as any dispute must be referred to arbitration as agreed.
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Re: Is the minimum wage a living wage? If not, why not?

Post by sickchip on Wed Jun 13, 2012 7:10 pm

Especially when you can make a couple of days actual work extend to a month of steady income, by the provision of advice incrementally. (Known within the profession as the "drip-feed" reporting strategy.)

...sounds too much like hard work Wink
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Re: Is the minimum wage a living wage? If not, why not?

Post by Phil Hornby on Wed Jun 13, 2012 8:20 pm

My own experience is that many employers inexplicably do not ' get on with it', despite strategies and exhortation to do so. This simply prolongs the process ( and therefore the time spent by those who were consulted in the first place).

But , hey - if that's how they want to spend their hard-earned cash.... cheers
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Re: Is the minimum wage a living wage? If not, why not?

Post by Stox 16 on Thu Jun 14, 2012 4:45 am

bobby wrote:The only job worth having in this day and age, is that of an assistant Consultants, consultant.

A City of London banker sounds a good job to me. as you fail and still get a fat bank bonus for trouble.
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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Thu Jun 14, 2012 9:57 am

The classic "Reward for failure" which Board Members award each other in a spirit of spending wisely the shareholders' investment. In the last Financial Year, UK Boardroom pay increased by an average of 11%, whilst the pay of employees rose by 1.1% median.

We're all in this together, but some animals are more equal than others.
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Re: Is the minimum wage a living wage? If not, why not?

Post by sickchip on Thu Jun 14, 2012 11:30 am

oftenwrong wrote:The classic "Reward for failure" which Board Members award each other in a spirit of spending wisely the shareholders' investment. In the last Financial Year, UK Boardroom pay increased by an average of 11%, whilst the pay of employees rose by 1.1% median.

...mmm the Boardroom chaps must be disappointed with such a paltry increase this year - they mormally get a bit more. I wonder what the difference between boardroom and employee is if taken over the past 30yrs...several hundred% perhaps?

Still, despite being low this year at least it's still substantially more than the employees - at least the moat is still getting wider. Pull up the bridge - we don't want any peasants getting across. It seems we're still heading in the right direction!
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Re: Is the minimum wage a living wage? If not, why not?

Post by Stox 16 on Fri Jun 15, 2012 2:35 am

sickchip wrote:
oftenwrong wrote:The classic "Reward for failure" which Board Members award each other in a spirit of spending wisely the shareholders' investment. In the last Financial Year, UK Boardroom pay increased by an average of 11%, whilst the pay of employees rose by 1.1% median.

...mmm the Boardroom chaps must be disappointed with such a paltry increase this year - they mormally get a bit more. I wonder what the difference between boardroom and employee is if taken over the past 30yrs...several hundred% perhaps?

Still, despite being low this year at least it's still substantially more than the employees - at least the moat is still getting wider. Pull up the bridge - we don't want any peasants getting across. It seems we're still heading in the right direction!

How very true this statement is of yours Sickchip. as remember many Tories still think of us as the mob.
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Re: Is the minimum wage a living wage? If not, why not?

Post by Stox 16 on Fri Jun 15, 2012 2:37 am

oftenwrong wrote:The classic "Reward for failure" which Board Members award each other in a spirit of spending wisely the shareholders' investment. In the last Financial Year, UK Boardroom pay increased by an average of 11%, whilst the pay of employees rose by 1.1% median.

We're all in this together, but some animals are more equal than others.

its sure is OW. What's more does anyone really know what these people do? other than lose money and get a big fat end of year bonus for doing it.
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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Fri Jun 15, 2012 11:01 am

The Directors of British Companies don't always lose money. A profitable but legal tax saving can be achieved by funnelling company funds through a place like Luxembourg.

A Company's Luxembourg arm lends money to the British one, which is tax-deductible here, but the profit earned in Luxembourg is very lightly taxed there, as little as 0.5%. In the 12 months to the end of March, Vodafone reported £1.3billion of underlying profit from its British operation, but paid NO corporation tax here. Vodafone Investments Luxembourg booked a profit of £3.5billion there, on which it paid £1,400 tax.

Amazon had sales of £3billion in this Country but by recording the sale in Luxembourg avoids British taxation. Similarly Apple provides I-Tunes downloads to British i-phones but channels the cost through Luxembourg where the VAT rate is 3%.

Directors get paid for knowing about things like that.

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Re: Is the minimum wage a living wage? If not, why not?

Post by sickchip on Sun Jun 17, 2012 9:09 am

Absolutely!
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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Fri Jun 22, 2012 9:49 am

Ed Miliband is revisiting the Labour Party's attitude on Immigrant Workers, with particular reference to currently poor enforcement of the minimum wage. Foreign workers in Care Homes especially are paid less than the legal minimum, and Miliband calls for stronger enforcement, inlcuding a doubling of the maximum fine.

http://www.bbc.co.uk/news/uk-politics-18539472
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Re: Is the minimum wage a living wage? If not, why not?

Post by tlttf on Sat Jun 23, 2012 8:19 am

Yup, let em in, then pay them more, theoretically this makes the local plebs as appealing to the employer as the shipped in. Problem being of course is because education has been dumbed down and aspiration has risen (kids seem to believe they should start work on top dollar), the immigrant with the work ethic will still get the job. Stopping them coming in the first place and raising education standards for the indigenous people is the only way forward?

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Re: Is the minimum wage a living wage? If not, why not?

Post by blueturando on Mon Jun 25, 2012 2:34 pm

TLTTF For Prime Minister!!!! Very Happy

Couldn't agree more with your last post

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Re: Is the minimum wage a living wage? If not, why not?

Post by astra on Mon Jun 25, 2012 4:37 pm

ask Putin to march his army and helicopters from the Pentland Firth to Cowes and see how many stay!

OR


Make a race between Russia's 'Best' and our SAS/SBS from John o' Groats to Landsend, (via Halifax, Oldham, Bradford, Leicester and London, and observe the departing traffic!
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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Mon Jun 25, 2012 5:21 pm

Meanwhile, back at the minimum wage debate, I was fascinated to eavesdrop on the conversation of two ladies operating adjacent tills at a Supermarket which had better remain unidentified.

They were discussing the extension of their working hours from 35 hours a week to 40 hours a week, WITHOUT any increase in their take-home pay.

Don't it make you proud to feel British?
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Re: Is the minimum wage a living wage? If not, why not?

Post by astra on Mon Jun 25, 2012 5:26 pm

AAAAAAAAA

EM!

AH, SO! That's how they can drop the price of petrol to £1,27?
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Re: Is the minimum wage a living wage? If not, why not?

Post by trevorw2539 on Mon Jun 25, 2012 7:01 pm

oftenwrong wrote:Meanwhile, back at the minimum wage debate, I was fascinated to eavesdrop on the conversation of two ladies operating adjacent tills at a Supermarket which had better remain unidentified.

They were discussing the extension of their working hours from 35 hours a week to 40 hours a week, WITHOUT any increase in their take-home pay.

Don't it make you proud to feel British?

Somebody's been reading Matthew 20. How to save money Wink
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Re: Is the minimum wage a living wage? If not, why not?

Post by Stox 16 on Tue Jun 26, 2012 12:35 pm

oftenwrong wrote:Meanwhile, back at the minimum wage debate, I was fascinated to eavesdrop on the conversation of two ladies operating adjacent tills at a Supermarket which had better remain unidentified.

They were discussing the extension of their working hours from 35 hours a week to 40 hours a week, WITHOUT any increase in their take-home pay.

Don't it make you proud to feel British?

OW a very true statement indeed. British supermarkets have driven down wages for little more than corporate greed and nothing more than that.
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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Tue Jun 26, 2012 7:21 pm

Any job is better than no job.

Discuss.
(Marks will be awarded for neatness).
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Re: Is the minimum wage a living wage? If not, why not?

Post by sickchip on Thu Oct 11, 2012 11:37 am

Excellent article, from Michael Meacher on a topic close to my heart:

The obvious mechanism at the base of the income pyramid is a significant rise in the minimum wage, which has stalled behind the rate of increase of average earnings. There is already momentum to push it to a "living wage", which several firms in London are already implementing at around £8.50 an hour.

But what about the top end where the ratio between the pay of chief executives and their average worker, which was 10:1 in the 1960s, has now ballooned to nearly 200:1? Various ideas have been kicked around, but none of them seem likely to have much impact.


Read the whole article:

http://www.guardian.co.uk/commentisfree/2012/oct/10/better-way-tackle-high-pay-predistribution?commentpage=last#end-of-comments
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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Thu Oct 11, 2012 12:17 pm

I have always thought that the concept of a "Minimum Wage" was the politician's equivalent of a baby's dummy. Give the proles something to chew on at an insignificant level, and they won't query what Directors pay themselves.

Wages have been at the mercy of inflation since the end of WW2. If the cost of living rises by 4% or 5% a year, wages are worth correspondingly less in terms of what you can buy with them. Any "minimum" figure must be tied to inflation or rapidly become meaningless.
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Re: Is the minimum wage a living wage? If not, why not?

Post by sickchip on Sat Oct 13, 2012 2:39 am

The use of unemployment as a wage-depressor.

It's all very well the Tories declaring they're behind ambitious hardworking go-getters, etc; but if the the working classes end up left with next to zero spending power, and can't afford to purchase goods, what will happen?

Cameron declared, in his speech: 'we just get behind people who want to get on in life. The doers. The risk takers. The young people who dream of their first pay-cheque, their first car, their first home – and are ready and willing to work hard to get those things. While the intellectuals of other parties sneer at people who want to get on in life, we here salute you. They call us the party of the better-off – no: we are the party of the want to be better-off, those who strive to make a better life for themselves and their families'. All very well, but the entire working population can't be like that. A lot of people just want a steady job with reasonable pay - and we will always need a large section of workforce willing to do the mundane tasks - cleaners, factory workers, labourers, shopworkers, etc......all essential tasks that keep things ticking over so the go-getters don't need to worry about the menial stuff. Do the people doing this work not figure on the tory radar? If they all downed tools we'd soon notice - and maybe appreciate their value to our system/society a little more. What about a living wage? Wouldn't that dramatically reduce the housing benefit/welfare bill?

I wonder how many businesses will go bust next year when the cuts begin to kick in and people have nothing to spend after being fleeced by landlords, gas/electric companies, transport costs, etc.

And then we'll have even more unemployment. Is that what the tories really want? I believe it is. The weaker we are, the easier it is to coerce us, remove our rights still further, etc.

I would not be surprised to see unemployment approaching 4million within 5yrs.....by that I mean solely figures for people signing on - and not the 'hidden' unemployed.

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How to ensure a living wage or better - without increasing prices

Post by skwalker1964 on Sat Nov 10, 2012 5:44 pm

Quite a few links in this one - for those please see the original at http://skwalker1964.wordpress.com/2012/11/10/how-to-ensure-a-living-wage-or-better-without-increasing-prices/

How to ensure a living wage or better - without increasing prices

I sometimes wonder at the lack of imagination shown by many of our politicians on key issues, and the ensuing willingness to accept the status quo. Or perhaps it’s that they like the status quo or are afraid of the consequences of challenging it, and therefore ‘dumb down’ their imaginations. Either way, the consequences for ordinary people tend to be bad – and sometimes very bad.

So it is with the discussion on the ‘living wage’ – about which David Cameron said, in the run-up to the last General Election, that it was ‘an idea whose time has come’, and yet once in office he hypocritically decided it wasn’t workable. The living wage is currently estimated at £8.55 per hour for London and £7.45 elsewhere – substantially higher than the legal minimum wage for adults of £6.19.

The one real problem with the idea is that companies, if forced to pay a living wage (a wage sufficient to allow a decent standard of living without requiring state support, e.g. housing benefit), are likely to simply put up prices to maintain profits, creating inflation and cancelling the benefit of the improved income for the lowest earners.

But not creating a living minimum wage is not an acceptable option – UK taxpayers are currently subsidising private profits to the tune of around £20 billion in the form of working tax credits.

Of course, the underlying problem is one of excessive profit expectations by investors, who want to squeeze every last percentage-point of profit from every enterprise, enriching themselves at the expense of the vast majority. But there are ways to discourage that, if we’re just a little bit creative and bold enough to implement them.

Here’s a way to achieve a living wage – or better – without necessarily legislating one. It would also help to manage investor expectations downward to a realistic level and curb the scandal of ridiculous pay packets for top executives (who usually receive entrepreneurial rewards for managerial performance, as economics commentator John Plender put it). And it would do it with little if any impact on prices, while favouring small businesses. Here’s how:

Any government that wants to achieve the good of a decent living wage with minimal adverse consequences needs to pass a law putting corporation tax on a sliding scale based on the ratio of the chief executive’s salary to the lowest earner.

This would kill several birds with one stone. Investors would then have more to think about than just profits – they’d be a lot more interested in limiting executive salaries to reasonable levels and they’d have a vested interest in paying their lowest earners a better rate.

The differential in the tax rate would only need to be small (there are people far better-qualified than me to work out exactly what the minimum, maximum and intervening steps should be), and the reduction in tax take (if you calculated the sliding scale correctly) would be more than offset by the state’s savings in benefits to low earners who are now magically getting a living wage or better.

Ethical companies would find themselves more competitive, too, which would impede the urge of the greedy to push up prices to customers. Small businesses, if they were genuinely unable to afford to pay a better wage, would also be paying the owner-CEO a lower salary – leading to a low top-bottom wage differential and a lower tax rate. When the small business starts to thrive and the owner wants to increase his own salary, he also has to factor in a pay increase for his staff or else face a rise in tax – so small businesses could compete and survive without providing an excuse for the greedy to pay poorly, and could offer the current minimum wage (probably to employes who are the 2nd earners in a family and can afford to accept them).

The cry from the right will be that limiting wage differentials in this way will prevent companies attracting the ‘cream’ (usually sour, in my opinion!) of executives, but executive salaries have climbed constantly without any link to improved performance. And if those executives don’t want the jobs, guess what – someone else will, who’ll be just as competent, more concerned with the welfare of others and a lot less likely to be psychopathic. Similarly, if businesses don’t want to operate under conditions that will help achieve a decent society, others will see the opportunity their departure creates and come – or else real entrepreneurs will see the opportunity and form companies to fill the gap – and we’ll have a more balanced economy with a wider spread of wealth. It’s simple supply and demand – and it can work without exploiting and impoverishing people.

I think it’s a good solution – it may not be perfect but far better than we have now – and if there are better ones, great. They’ll be there to find if we just apply a little creativity, and have the courage of our convictions to do so.

This government’s narrative for all our problems is that there’s nothing we can do about the real issues in a globalised economy, and that we therefore have to try to solve problems created by the rich (although what they’ll actually say is they were created by Labour, which is simply untrue) by penalising the poor: capping benefits, reducing the number of people eligible for them, slashing wages. making pensions more expensive, making us work longer an so on.

That’s because their paymasters (they’re very fond of that word, the Tories – ‘union paymasters’ especially) are those who are very fond of the status quo and want to get even richer. And actually articulating, let alone addressing, the real issues would mean the Tories couldn’t continue their habitual demonisation of those they want to rob in favour of those who are already wealthy. And they wouldn’t want that, would they?
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Re: Is the minimum wage a living wage? If not, why not?

Post by boatlady on Sat Nov 10, 2012 6:42 pm

Do you know, I read this somewhere else and found the argument quite compelling - which might not mean a lot, as I'm a bit inexperienced in thinking about politics, economics and such.
I also heard something on the radio tonight about pension plans, saying that a Dutch pensioner, paying the same into a pension plan as his English counterpart and retiring at the same age after the same number of years in work, would have a pension 50% larger than the English pensioner. That seems a bit wrong to me.

p.s. I'm really sorry you didn't get shortlisted for the local seat - you seem a good clear thinking sort of bloke - maybe a bit too honest for government?


Last edited by boatlady on Sat Nov 10, 2012 6:43 pm; edited 1 time in total (Reason for editing : addition)
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Re: Is the minimum wage a living wage? If not, why not?

Post by skwalker1964 on Sat Nov 10, 2012 7:40 pm

Thank you - don't we need honest politicians? lol

I came up with the idea independently, but it doesn't surprise me that someone else hit on the same or similar. It just makes sense. Who knows, perhaps Ed M or someone with influence will pick it up. I think it would be a good item to campaign on.
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Re: Is the minimum wage a living wage? If not, why not?

Post by boatlady on Sat Nov 10, 2012 9:09 pm

Yes, we do need honest politicians, but the other sort do kind of outnumber the honest ones and that makes it very difficult for the good ones to make a difference - especially given the school playground atmosphere of the House of Commons.
Everyone's looking for simple answers to complex problems, which does sort of favour the liars and villains.
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Re: Is the minimum wage a living wage? If not, why not?

Post by skwalker1964 on Sat Nov 10, 2012 9:24 pm

Yes. I'm expecting good things from Andy McDonald - especially after seeing him in action today and having a few chances to talk to him. He's a proper old-school Labour man - i.e. a socialist Smile - and intensely passionate for the town.

It's almost enough to make me happy I didn't get through lol.
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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Sat Nov 10, 2012 11:40 pm

One day the population will realise that a Parliamentary system that began with Simon deMontfort six hundred years ago is well past its "best before" date.

The internet affords possibilities of consulting everybody about everything with no need for intermediaries.
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Re: Is the minimum wage a living wage? If not, why not?

Post by starlight07 on Sat Nov 17, 2012 9:32 am

The minimum wage is increasing year by year in small amounts. I remember it being around the mark of £4.50 few years ago. However there is no threshold value for the maximum wage.
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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Wed Nov 21, 2012 7:39 pm

UK Citizens speak with forked tongue on this subject. All of us wish to be paid an amount commensurate with the work we do, but resent paying more for essential goods than we did last year.

A small number of activities are Capital Intensive, like Oil-exploration or Jewellery, but the vast range of Commercial activity relies on people to work towards making a profit. In that context people are an expensive commodity - they all want to be paid a "living wage" but that cost adds to the price of the Product.

Enter the Consumer (also a wage-slave) who says, "I'm not paying THAT!" so the Producer is forced to reduce the price by reducing Costs, and the easiest way to do that is by paying lower wages.

Anyone got a better idea?
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Re: Is the minimum wage a living wage? If not, why not?

Post by Ivan on Wed Dec 26, 2012 3:26 pm

Tory myth: 'WORK IS THE BEST ROUTE OUT OF POVERTY'

The majority of children and working-age adults in poverty in the UK live in working, not workless, households. That's 6.1 million people – 2 million children and 4.1 million adults - a million more people than are living in poverty in workless households.

Low pay is the biggest cause of poverty in this country; a fifth of British workers are paid less than the 'living wage'. The national minimum wage is now worth less in real terms than it was in 2004.

http://www.huffingtonpost.co.uk/mehdi-hasan/welfare-budget-10-things-they-dont-tell-you_b_2314578.html?utm_hp_ref=tw

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Re: Is the minimum wage a living wage? If not, why not?

Post by bobby on Wed Dec 26, 2012 4:01 pm

Whilst we are heavily dependant on so called invisible earnings, its not in the Governments interest to see a fairer wage system. You only need a fair wage system when you are reliant on people earning a descent wage in order to go out and fuel manufacturing income, which then goes back to the employee’s by way of a fair wage and on and on in an upward spiral.

Take the manufacturing away and we are left with Banking and insurance etc, industries that are not labour intensive and not reliant on the home market. The last thing this Government wants is for a public with loads of disposable income who simply spend it on goods made in other countries, reducing our balance of payments regarding import and export. The only way I can see any long term improvement is to return to manufacturing and re-nationalising much of what this evil Government have privatised for no other reason than personal greed.

We now can not compete with the likes of India, and China in cheap goods, but we can compete with any one when it comes to quality and technology, so this is where I think we should be heading. I will continue to dream.
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Re: Is the minimum wage a living wage? If not, why not?

Post by tlttf on Thu Dec 27, 2012 9:40 am

You've pretty much hit the nail on the head there bobby, concentrate on R&D and quality. The right way forward.

Merry Christmas and a happy new year to you and yours mate.

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How to achieve a living wage without increasing prices

Post by skwalker1964 on Fri Dec 28, 2012 9:38 am

oftenwrong wrote:UK Citizens speak with forked tongue on this subject. All of us wish to be paid an amount commensurate with the work we do, but resent paying more for essential goods than we did last year.

A small number of activities are Capital Intensive, like Oil-exploration or Jewellery, but the vast range of Commercial activity relies on people to work towards making a profit. In that context people are an expensive commodity - they all want to be paid a "living wage" but that cost adds to the price of the Product.

Enter the Consumer (also a wage-slave) who says, "I'm not paying THAT!" so the Producer is forced to reduce the price by reducing Costs, and the easiest way to do that is by paying lower wages.

Anyone got a better idea?

I think I may have. Here's an article I wrote some time ago on the Living Wage and how to achieve it with minimal impact on prices, and while also solving another problem, as well as promoting ethical businesses. It's also probably going to form a chapter in Labour Left's 'Red Book' policy book. I think it would work, although it would need some political bravery to put it into action. The original, including links, is at: http://skwalker1964.wordpress.com/2012/11/10/how-to-ensure-a-living-wage-or-better-without-increasing-prices/

I sometimes wonder at the lack of imagination shown by many of our politicians on key issues, and the ensuing willingness to accept the status quo. Or perhaps it’s that they like the status quo or are afraid of the consequences of challenging it, and therefore ‘dumb down’ their imaginations. Either way, the consequences for ordinary people tend to be bad – and sometimes very bad.

So it is with the discussion on the ‘living wage’ – about which David Cameron said, in the run-up to the last General Election, that it was ‘an idea whose time has come’, and yet once in office he hypocritically decided it wasn’t workable. The living wage is currently estimated at £8.55 per hour for London and £7.45 elsewhere – substantially higher than the legal minimum wage for adults of £6.19.

The one real problem with the idea is that companies, if forced to pay a living wage (a wage sufficient to allow a decent standard of living without requiring state support, e.g. housing benefit), are likely to simply put up prices to maintain profits, creating inflation and cancelling the benefit of the improved income for the lowest earners.

But not creating a living minimum wage is not an acceptable option – UK taxpayers are currently subsidising private profits to the tune of around £20 billion in the form of working tax credits.

Of course, the underlying problem is one of excessive profit expectations by investors, who want to squeeze every last percentage-point of profit from every enterprise, enriching themselves at the expense of the vast majority. But there are ways to discourage that, if we’re just a little bit creative and bold enough to implement them.

Here’s a way to achieve a living wage – or better – without necessarily legislating one. It would also help to manage investor expectations downward to a realistic level and curb the scandal of ridiculous pay packets for top executives (who usually receive entrepreneurial rewards for managerial performance, as economics commentator John Plender put it). And it would do it with little if any impact on prices, while favouring small businesses. Here’s how:

Any government that wants to achieve the good of a decent living wage with minimal adverse consequences needs to pass a law putting corporation tax on a sliding scale based on the ratio of the chief executive’s salary to the lowest earner.

This would kill several birds with one stone. Investors would then have more to think about than just profits – they’d be a lot more interested in limiting executive salaries to reasonable levels and they’d have a vested interest in paying their lowest earners a better rate.

The differential in the tax rate would only need to be small (there are people far better-qualified than me to work out exactly what the minimum, maximum and intervening steps should be), and the reduction in tax take (if you calculated the sliding scale correctly) would be more than offset by the state’s savings in benefits to low earners who are now magically getting a living wage or better.

Ethical companies would find themselves more competitive, too, which would impede the urge of the greedy to push up prices to customers. Small businesses, if they were genuinely unable to afford to pay a better wage, would also be paying the owner-CEO a lower salary – leading to a low top-bottom wage differential and a lower tax rate. When the small business starts to thrive and the owner wants to increase his own salary, he also has to factor in a pay increase for his staff or else face a rise in tax – so small businesses could compete and survive without providing an excuse for the greedy to pay poorly, and could offer the current minimum wage (probably to employees who are the 2nd earners in a family and can afford to accept them).

The cry from the right will be that limiting wage differentials in this way will prevent companies attracting the ‘cream’ (usually sour, in my opinion!) of executives, but executive salaries have climbed constantly without any link to improved performance. And if those executives don’t want the jobs, guess what – someone else will, who’ll be just as competent, more concerned with the welfare of others and a lot less likely to be psychopathic. Similarly, if businesses don’t want to operate under conditions that will help achieve a decent society, others will see the opportunity their departure creates and come – or else real entrepreneurs will see the opportunity and form companies to fill the gap – and we’ll have a more balanced economy with a wider spread of wealth. It’s simple supply and demand – and it can work without exploiting and impoverishing people.

I think it’s a good solution – it may not be perfect but far better than we have now – and if there are better ones, great. They’ll be there to find if we just apply a little creativity, and have the courage of our convictions to do so.

This government’s narrative for all our problems is that there’s nothing we can do about the real issues in a globalised economy, and that we therefore have to try to solve problems created by the rich (although what they’ll actually say is they were created by Labour, which is simply untrue) by penalising the poor: capping benefits, reducing the number of people eligible for them, slashing wages. making pensions more expensive, making us work longer an so on.

That’s because their paymasters (they’re very fond of that word, the Tories – ‘union paymasters’ especially) are those who are very fond of the status quo and want to get even richer. And actually articulating, let alone addressing, the real issues would mean the Tories couldn’t continue their habitual demonisation of those they want to rob in favour of those who are already wealthy. And they wouldn’t want that, would they?
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Re: Is the minimum wage a living wage? If not, why not?

Post by oftenwrong on Fri Dec 28, 2012 5:35 pm

Britain tends to follow US ways of doing business, and their universal attitude is that nothing should unnecessarily impede the citizen's right to earn the maximum profit for his/her labours. Inevitably such a system favours the privileged, whether by intellect or inheritance, but any talk of "capping" maximum rewards will be dismissed as communist claptrap.

By definition, elected representatives have to face re-election at four or five year intervals, which encourages short-term thinking.
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Re: Is the minimum wage a living wage? If not, why not?

Post by skwalker1964 on Sat Dec 29, 2012 9:37 am

oftenwrong wrote:Britain tends to follow US ways of doing business, and their universal attitude is that nothing should unnecessarily impede the citizen's right to earn the maximum profit for his/her labours. Inevitably such a system favours the privileged, whether by intellect or inheritance, but any talk of "capping" maximum rewards will be dismissed as communist claptrap.

By definition, elected representatives have to face re-election at four or five year intervals, which encourages short-term thinking.

In the short term, then, the majority of people think top executives earn too much relative to their employees - and, in most cases, relative to the success of their companies. 'Entrepreneurial rewards for managerial performance', as one conservative economist put it.

I think a majority of people would be behind such a move - so short-termist politicians should be all for it, at least on the left.
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Re: Is the minimum wage a living wage? If not, why not?

Post by tlttf on Sat Dec 29, 2012 11:21 am

Excellent post Steve and one that I agree with, e Very Happy ven though I'm right of centre

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Re: Is the minimum wage a living wage? If not, why not?

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