Table of Contents
National Minimum Wage Act 1998 – This is the act introduced in the UK in 1998. There was no law regarding the wage before 1998. It is a legal requirement for the employer to pay the employee national minimum wage and if the employer fails to do this then Her Majesty’s Revenue & Customs (HRMC) have the right to take employers to court.
The effect of the minimum wage depends on whether the minimum wage is binding or Non binding.
Non binding
The minimum wage is not binding if it is below the equilibrium rate. No one wants to work or pay for the wage that the below the minimum. This means that the market forces and the forces of the law will not conflict.
127 our experts are availableright now
Binding
Binding minimum wage is binding if it is above the set wage. The market forces and minimum wage law are conflicted in this case. Adjustment to the minimum wage will not be possible with binding minimum wage. In competitive labour market the minimum wage that is above the equilibrium wage decreases unemployment. But this does not occur in all types of labour market.
Equality Act 2010 – This equality act was passed in April 2019 and it brings together all the existing legislations. Under this act it is now permitted for the employer to ask any health related questions. It does not give the applicant tribunal case if the employer asks prohibited question but it that question is anyhow discriminated then the employer will need to prove the intentions.
Possibility to Increase Worker Productivity
The increase in minimum wage can help significant productivity improvements, the employees will stay longer with the same employer and can also reduce turnover. The employers tend to establish a team that is committed to achieving the goals and they have a vision of the company to achieve the success, this is one of the reasons why 47% of the employers favour the increase of minimum wage. When the employees receive more salaries they are more dedicated towards the work and employers benefit from the work. Sometime it can cause economic stress to the business but having an efficient work force management can help companies turn the extra labour cost into more productivity and long term benefit.
Reductions in Number of Employees and Employment
In some cases, this can also have disadvantages as some workers report that their hours have been cut due to the increases minimum wage to their employees. There were 1.36 million people unemployed in the UK in September 2018 and this has fallen by 95,000 since September 2017. The employment rate from November 2018 to January 2019was estimated at 76.1% which is higher than November 2017 which was 75.3%. There were around 3.9% of the unemployed people in proportion of all the people who are employed and have not been lower since November 1974 to January 1975. The amount of self- employed workers also decreased by 46,000 to 4.8 million. This was the lowest unemployment rate in over forty years.
Impacts on Margins and Cash Flow
To be able to pay the employee’s minimum wage the companies will need to allocate more resources. Nowadays in this competitive world smaller business might be struggling to survive and the higher salary of the employees can be a tipping point that pushes them over the edge. In the few past years smaller companies have had to close the operations down due to the increased wages and start-ups find it very hard to receive the fund in order to stay successful in business. This can have impact on the margins and cash flow as the companies will be forced to push extra costs onto their customers. This can very easily lead to client dissatisfaction and losing customers.
Current rates
In the United Kingdom the wage rates are reviewed in April every year. Below are the current rates of the year 2020 and the previous year rates of 2019.
Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2020 (current rate) £8.72 £8.20 £6.45 £4.55 £4.15
April 2019 to March 2020 £8.21 £7.70 £6.15 £4.35 £3.90
The apprentices can get the apprentice rate if they are under 19 years. They are also entitled if they are 19 and over but this is the first year of the apprenticeship.
Conclusion
The national minimum wage should be increased even though it can cause unemployment but work should have dignity and this means employees getting paid enough to live a healthy lifestyle. In my opinion this is an ethical issue because it prevents inexperienced people from getting the job at a very low rate and it will help them gain experience and skills for a greater wage in future. If the minimum wage act is not there it will shut the people with no experience out of the labour market, which can lead those people to work illegally or for gangs which forced them to lead the life of crime.
This can be seen as unfair as the only people who will benefit from the minimum wage will be the people who are employed. Unemployed workers have to work very hard to look for new work. In my opinion Minimum wage is a very god idea because people are treated same and with fairness and they will all get the same wages, there will be less discrimination or favouritism. Minimum wages can have its complications in economical environment in the future because if the wage increases that could mean the prices of the products will also increase which can lead to higher cost of living.
In my opinion the manager should given get the minimum wage as she had worked for the company for over 2 years moreover she should have been given a raise in her pay for her dedication on top of the minimum wage. If I was the employer I would provide all my employees with the minimum wage and in return I would expect the employees to give 100% dedication to the work.
