The questions around the minimum wage are always going to create a heated discussion and in my opinion is just another way for governments and usually socialist style governments to control the economy and turn things in to a nanny state!
What is a minimum wage?
The minimum wage is the lowest hourly, daily or monthly wage that employers may legally pay to their employees. Minimum wage laws also prevent workers from selling their labour at an amount which is lower than the minimum wage level. Those that defend and advocate a minimum wage say that it increases the standard of living of workers and also reduces poverty.
Whereas those that that are against minimum wage say that if the level is set high enough to be effective, then it increases unemployment and in particular among those workers with very low productivity due to inexperience or handicap.
Minimum wage history
It seems as though the origins of minimum wage were in Australia and New Zealand as far back as 1824 and became law in 1910, when Sir Winston Churchill was Prime Minister of the UK. Statutory minimum wages were introduced in American back in 1938 and all but five states of America have a minimum wage level.
18 out of the 27 member states of the European Union have minimum wage laws with the likes of Germany, Italy, Switzerland and Austria not having any such laws. In most cases the minimum wages are being set and manipulated by the unions. It can be seen from the success of countries like Germany that the arguments for a minimum wage do not hold and as far as I am aware poverty is no higher in Germany than it is in other European States.
The implications of minimum wage laws
In my opinion there should be no minimum, as things usually settle out in a capitalist economy – in my previous article on ‘are multi-million pound salaries ever justified?’ these high incomes are arrived at through market forces. For example if society no longer likes something then they will no longer buy and the company will then go out of businesses. If someone writes a book and there are no people that like the book then it will not sell! Equally, if a company sets their pay too low and there are other similar jobs with a higher pay rate then employees will simple vote by where they go.
The problem with most people is that that expect too much and they are not prepared to work for what they get. It is like employees that go on strike for example, the recent strikes at The Royal Mail, instead of striking, why don’t these employees simply move job or set up their own business? The answer is that they feel they are owed!
It was their choice to work as a postal worker and they knew full well what the pay was when they started – these businesses need to modernise or else they will simply join the dust pile like Woolworths. The UK’s car industry was destroyed by the unions! Employees just could not see that their selfish action destroyed the very company they were working for – their continual striking became the ultimate down-fall of Rover and of British Leyland.
Employees need to sit down and ask themselves the question “would I prefer to be in a job earning a wage whilst the company goes about modernising, thereby ensuring the future of the business so that there will be jobs now AND in the future?”
Employees tend only to see the Here and Now and not that in order to survive, the company has to look further forward. Change and investment in essential for any business and especially in today’s world with the Internet and the World Wide Web.
Also, those that want a minimum wage and those that are advocates of this system, should be prepared to move jobs in order to earn their preferred salary, instead of imposing a false wage level on businesses which in some instances the company cannot afford to do so.
The UK does have a current minimum wage and the government will increase this each year, normally inline with inflation, so businesses need to cope with raising minimum wage year to year to avoid any penalties.
Governments in the major world economies such as the UK and America need to carefully consider the effects on businesses from raising the current minimum wage level, especially in the current economic climate.