{"id":5617,"date":"2015-09-11T16:20:51","date_gmt":"2015-09-11T15:20:51","guid":{"rendered":"http:\/\/unitelive.org\/?p=5617"},"modified":"2015-09-12T12:08:16","modified_gmt":"2015-09-12T11:08:16","slug":"one-per-cent-in-wages-howl","status":"publish","type":"post","link":"https:\/\/unitelive.test.igniteamt.com\/?p=5617","title":{"rendered":"One per cent in wages \u00e2\u20ac\u0098howl\u00e2\u20ac\u2122"},"content":{"rendered":"
<\/div>\n

When the National Minimum Wage (NMW) was first introduced in 1999, many in the business community claimed the sky was falling \u00e2\u20ac\u201c unemployment would skyrocket, profits would fall, and the very people that a statutory minimum wage was supposed to help would end up losing out.<\/p>\n

 
\nBut the exact opposite happened after the flagship Labour policy came into effect.<\/p>\n

 
\nResearch from the London School of Economics<\/a> found that aggregate unemployment actually fell after the NMW was introduced, and it had a profoundly positive impact on pay for those at the bottom end of the wage distribution. Even when examining low-pay sectors such as hospitality, cleaning and retail, which would have ostensibly been worst hit by the new NMW, employment rose in these sectors between 1999 and 2006 from 6.3m to 6.7m.<\/p>\n

 
\nIf anything, the NMW was a boon for both workers and business.<\/p>\n

 
\nNow that the chancellor George Osborne has introduced a higher National Minimum Wage, which will rise to \u00c2\u01417.20 an hour this year and continue increasing to \u00c2\u01419 an hour by 2020, businesses are at it again \u00e2\u20ac\u201c warning that the wage hike will cause unemployment and will force them to pass on the higher wage bill to the consumer.<\/p>\n

 
\n\u00e2\u20ac\u0098Implausible\u00e2\u20ac\u2122 claims<\/strong><\/em><\/p>\n

 
\nClothing retailer Next<\/a> joined several profit-flush companies this week, including Whetherspoons<\/a> and Whitbread, the group owning Costa Coffee,<\/a> arguing that the new minimum wage will hit profits and hamper job creation. The cost, they warn, will be passed on to consumers in the form of higher prices.<\/p>\n

 
\nThey were backed up by the Confederation of British Industry\u00e2\u20ac\u2122s new president Paul Dreschler, who claimed to the Financial Times<\/a> earlier this week that the wage hike would have a \u00e2\u20ac\u015bdramatic impact\u00e2\u20ac\u0165 on profitability and hiring.<\/p>\n

 
\n\u00e2\u20ac\u015bI\u00e2\u20ac\u2122ve talked to several chief executives and been surprised by the impact on their profits of the change,\u00e2\u20ac\u0165 Paul Drechsler told the FT. \u00e2\u20ac\u015bIn one [big] company it would wipe out all of their profits.\u00e2\u20ac\u0165<\/p>\n

 
\nDreschler added that for \u00e2\u20ac\u0098people businesses\u00e2\u20ac\u2122 in the service industry, the new wage hike would mean reduction in staff by as much as 10 to 20 per cent.<\/p>\n

 
\nBut director of the National Institute of Economic and Social Research Johnathan Portes told UNITElive that the CBI\u00e2\u20ac\u2122s claims are far removed from reality.<\/p>\n

 
\n“The assertions from the CBI quoted in the FT seem implausible on their face and inconsistent with the evidence,\u00e2\u20ac\u0165 he said.<\/p>\n

 
\n\u00e2\u20ac\u015bThe Office for Budget Responsibility estimates that the impact on wage bills will equal about 1 per cent of aggregate corporate profits,\u00e2\u20ac\u0165 Portes added. \u00e2\u20ac\u015bThat’s not nothing – but if, as the CBI president claims, that would completely wipe out the profits of one very big company, then frankly that company’s doing something very wrong already.<\/p>\n

 
\n\u00e2\u20ac\u015bHis \u00e2\u20ac\u0098estimate\u00e2\u20ac\u2122 that \u00e2\u20ac\u0098people businesses\u00e2\u20ac\u2122 will reduce employment by 10 to 20 per cent seems even more fanciful,\u00e2\u20ac\u0165 he went on to say. \u00e2\u20ac\u015bMore than 5m people work in retail and hospitality and catering – does anyone seriously claim that the proposed higher minimum wage will cost more than half a million jobs, compared to the OBR’s estimate of 60,000? Certainly there is absolutely nothing in the economic literature or existing evidence to support this claim.”<\/p>\n

 
\nProfit surge<\/strong><\/em><\/p>\n

 
\nCosta Coffee owner Whitbread has warned about coffee price rises against a backdrop of skyrocketing profits \u00e2\u20ac\u201c it recently reported a surge in profits by more than 18 per cent this year to \u00c2\u0141500m. The company, which also owns Premier Inn, awards its CEO more than \u00c2\u01416m including bonuses and incentives.<\/p>\n

 
\nFormer director of the World Development Movement Deborah Doane argues<\/a> that companies passing on wage hikes to consumers is only an excuse to \u00e2\u20ac\u015bmaintain the ridiculously high salaries of those at the top.\u00e2\u20ac\u0165<\/p>\n

 
\n\u00e2\u20ac\u015bCosta is effectively giving with one hand and taking with the other,\u00e2\u20ac\u0165 she said. \u00e2\u20ac\u015bThis isn’t about income inequality; it’s about business as usual for the 0.1 per cent who refuse to have less in favour of the greater good.\u00e2\u20ac\u0165<\/p>\n

 
\nIndeed, now that already low-paid workers will be saddled with higher prices on consumer goods, they will be doubly hit by cuts to tax credits announced in Osborne\u00e2\u20ac\u2122s most recent budget.
\nWorking people attacked<\/p>\n

 
\nA report released on Wednesday<\/a> (September 9) by the Institute for Fiscal Studies found that the minimum wage hike, which Osborne has disingenuously branded a \u00e2\u20ac\u015bliving wage\u00e2\u20ac\u0165, will not make up for cuts to in-work benefits, leaving those on low-income significantly worse off.<\/p>\n

 
\nThe report found that cuts to tax credits will slash on average of \u00c2\u0141750 a year from low-income households. The new so-called \u00e2\u20ac\u0098living wage\u00e2\u20ac\u2122 \u00e2\u20ac\u201c which the Living Wage Foundation calculates <\/a>to be well below what constitutes an actual liveable wage \u00e2\u20ac\u201c will add only \u00c2\u0141200 a year to low-income households. This would mean that those already struggling to put food on the table will be more than \u00c2\u0141500 a year worse off as Osborne\u00e2\u20ac\u2122s budget is implemented.<\/p>\n

 
\nFormer LibDem leader Nick Clegg railed against the inadequate living wage<\/a> yesterday that\u00e2\u20ac\u2122s being coupled with massive cuts to tax credits.<\/p>\n

 
\n\u00e2\u20ac\u015bWhy should, say, a single mother with a young son at home working as a nurse for 28 hours a week earning \u00c2\u014118,000 lose a staggering \u00c2\u01412,000? Clegg asked. \u00e2\u20ac\u015bOr the couple with three children, both working 37 hours a week on the minimum wage, one in a restaurant and the other as a shop assistant, suddenly lose more than \u00c2\u01411,200 of their household income? Their income may rise in line with the minimum wage but this will be offset by cuts to tax credits. What possible incentive do they have to work more hours?\u00e2\u20ac\u0165<\/p>\n

 
\nUnite assistant general secretary Steve Turner argued that in austerity Britain, working people face attack both from government and big businesses.<\/p>\n

 
\n\u00e2\u20ac\u015bThe chancellor\u00e2\u20ac\u2122s new so-called \u00e2\u20ac\u0098Living Wage\u00e2\u20ac\u2122 is anything but \u00e2\u20ac\u201c it\u00e2\u20ac\u2122s only a modest increase in the NMW, which is far from being enough to live on, it arbitrarily excludes those under 25 and it\u00e2\u20ac\u2122s cynically employed by the Tory government to serve as a political smokescreen covering up swingeing cuts to in-work benefits,\u00e2\u20ac\u0165 he said.<\/p>\n

 
\n\u00e2\u20ac\u015bThat very successful businesses swimming in profits such as Whetherspoons and Next are attacking a minuscule increase in wages for their lowest paid workers shows just how ideologically committed they are to a world in which the 1 per cent thrive at the expense of the 99 per cent.\u00e2\u20ac\u0165<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

When the National Minimum Wage (NMW) was first introduced in 1999, many in the business community claimed the sky was falling \u00e2\u20ac\u201c unemployment would skyrocket, profits would fall, and the very people that a statutory minimum wage was supposed to help would end up losing out.   But the exact opposite happened after the flagship […]<\/p>\n","protected":false},"author":1,"featured_media":5621,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[17],"tags":[76,215,178],"wps_subtitle":"Businesses cry wolf over minimum wage hike","_links":{"self":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/5617"}],"collection":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5617"}],"version-history":[{"count":1,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/5617\/revisions"}],"predecessor-version":[{"id":5622,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/5617\/revisions\/5622"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/media\/5621"}],"wp:attachment":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}