The CBI recently called for the next minimum wage rise to be a small one, we currently have a minimum wage of £5.52 for employees who are 22 or older, £4.60 for those ages 18-21 and £3.40 for those who are under 18 and no longer of compulsory school age.Â
Now here is my problem, firstly my company Holden Associates act for small business, but none of our clients pay their staff the minimum wage (just to clarify they pay over, not under the national minimum wage), after all if we take the new rate of £5.52 for a 40 hour week that is before any deductions £220.80, so now lets assume this employee would be paid for holidays etc then £220.80 is £11,481.60 for the year, but this is still (Gross) before deductions, so lets make the appropriate deductions (assuming standard personal allowance) from this wage of Tax £1,107.62 and National Insurance £691.08, this leaves the employee with an average net take home every week of £186.20.
How does someone on a net annual income of around £9,682.90, that’s a little over £806 per month, ever stand a chance of being able to afford to buy a house, or after they have bought food, paid their rent, paid the council tax, light, heating, and the list goes on, how do they live above the poverty line?
I know that the minimum wage is more prevalent in certain industries, but how many of the employers also earn this minimum wage?
Technorati Tags: National Minimum Wage, SME, CBI, OMB, Employees, Employing staff, Employers
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Natasha (Who am I?)
1 year ago
Not just you!
The concept of a minimum wage is useful, however the reality of being able to live of the earnings is unrealistic for most. How the government can begin to believe that it is livable is hard to see. It would be better used a a guidline for very small businesses with very low profits. I have come accross large very profitable organisations who will happily pay, for example, their cleaning staff the minimum wage and their managers very decent salaries plus benefits. It seems unfair and short sighted that some companies make the decision that the work of cleaner is any less valuable than that of other unskilled or semi skilled roles within the business, such as receptionist or basic administration.
There will never be an ideal answer to the issue, as some businesses would cease to exist if they paid much over the minimum wage. However it is vital that the government reviews how appropriate it is and works with business and the workers who are paid minimum wage to establish a more appropriate approach.
Jason Holden (Who am I?)
1 year ago
Hi Natasha,
I’m glad I’m not alone on this one, and a HR professional agrees with me
Jason