I am sick and tired of hearing arguments against the National Living Wage by employers who think it will hurt their business. Perhaps it will, but it also hurts people who are employed too. The increase in wages for someone on the minimum hourly wage is 10% and by 2020 it will be nearly 38.5%. OK, although the percentage looks high it isn’t much in monetary terms when starting from a low base however, many people are only getting 1% pay rise which isn’t enough to cover the increase in living costs despite inflation being so low (I still prefer RPI to CPI).
What concerns me is that before long those on minimum wage who may not have invested in their education or have as much experience as others will be closing the gap on those who do. What happens to those close to the bottom but are not getting the recognition they deserve? Feel pretty disgruntled I imagine, and employers are likely to want to keep wages low arguing that it keeps prices down so we can afford them (and that’s because we’re paid so badly) – getting the downward spiral here? Employers though will keep pocketing large profits and the likelihood of getting paid more or promoted is getting less and less as well.
Businesses in the UK have always under-invested, which in itself harms the economy. They are quick to blame others for their dwindling market share over time. What they need to consider is investing in their staff and their business and do more to sustain them (and ultimately themselves). We may be getting used to continuous low interest rates, but the view is still far too short term and there is still too much ‘tinkering’ of the labour market at the outer edges. There will be more tinkering required in a few years’ time and it should be higher taxes for the richest and something more for the middle-low.
I hope many middle income workers will eventually look to go abroad to live because the course we are on will surely lead to a dichotomous workforce, a second Victorian type era. If you are used to a certain level of wealth there is nothing worse than seeing your life get worse and poorer when your expectations are for it to improve. It did not surprise me at all that a study recently found that social mobility had not increased since the 1970’s. Despite so many claims made about increase wealth, the reality has been very different. Only my parent’s generation have seen real gains and I believe that is because they re-built on such a scale that it could not fail. We do not have that now so it is very difficult to see how any real gains will be made.