The national minimum wage has been in place since the beginning of this century and to all intents and purposes seems to be a fixture for years to come. The idea of the initiative was that it would guarantee that employees were able to afford a reasonable standard of living, even if working in jobs that were considered to be lower paid. Over the last 16 or so years, it has risen roughly in line with the changes in the economy and cost of living.
Changes
Of course, other changes have come into play as the scheme has developed. In recent years the re-emergence of the apprentice system to allow for changes in the education rules meant a new category, and the age categories have been widened to reflect the needs of an older worker.
It is probably in the age-related pay that the biggest change has come in that recently, April 2016 to be exact, the National Living Wage was introduced. In October this year, the newest round of wage levels came into play, and they now stand at
- £3.40 for an apprentice
- £4.00 for under 18’s
- £5.55 18 to 20
- £6.95 for 21 to 24
- £ 7.20 for over 25’s
Impact
The new rates will, of course, have some impact on both the employer and the employee, in theory costing one more, and the other gaining from the increases. However, the effectiveness of the system as a way of raising the standard of living for the lowest paid is often questioned, and there is also the concern that the increase will result in difficulties for employers who want seasoned workers but cannot afford the higher rates of pay. Many people say that statistically, those benefiting from the minimum wage are often in households with a much higher earner. Therefore, the benefit of a guaranteed low income is not being seen for the poorest in society. For the employer, any rise in the wages bill will certainly be a worry, and this is a particularly bad time for increased costs when we are expecting post-Brexit fuel cost increases and possibly a general downturn in the economy.
Supporting arguments
On the converse side of the discussion, there are some compelling arguments supporting a minimum wage structure. The government insists that the new living wage, in particular, will result in the lifting of millions of families above the poverty line and that it is welcomed by employees. Employers often report that a small increase in wage results in a disproportionate boost to productivity. There also seems to be a motivation to invest in training and development of the staff more if they are on a higher salary. This, in turn, should lead to greater job satisfaction (a very desirable asset and one difficult to achieve with low paid workers) and more stability amongst staff. Also, while there is a temptation to edge towards employing a younger workforce to save costs, any employer will tell you that an experienced and highly competent workforce will pay dividends in the relatively short term.
Whichever side of the argument you agree with, the minimum wage is unlikely to change, and it is very likely to increase again shortly. Speculating on the good and bad of the system is really probably less important than embracing the change and budgeting accordingly.