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Review the Minimum Wage

Comment 1st July 2010

Thanks to the poor rate of accommodation offset, and the lack of a food offset altogether, most employers no longer allow for live-in staff.  Before the Minimum Wage was introduced the very lowest earners used to get casual jobs with accommodation and food, and (consequently) a VERY low hourly rate, but they became worse off when they had to find their own accommodation at the market rate, and had to buy their own food.  To put it another way, although the lowest earners now earn more hard cash, they had more disposable income before when the value of the whole package was higher.  In effect for some of the lowest earners the way the Minimum Wage operates has lowered living conditions for those worst off, and the raise in the hourly rate has cut job creation (as employers cannot afford to just take someone on any more).

The only group to benefit in every case was the revenue, as the raise in the wage pushed the lowest earners into the income tax and National Insurance brackets.

I don't think we should get rid of the Minimum Wage, as it does offer protection to many many earners, but we need to make sure that it really is helping the lowest earners, is helping job creation, and is not just a back door way of increasing tax receipts.

Why does this matter?

Job creation is vital at the moment, and a more balanced approach to the total value of pay and conditions packages for the lowest end of the pay scale may help employers to take on workers if they are cheaper to employ. 

It may also improve living conditions for some of the lowest paid workers.


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