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Pay rise for a million workers


Updated on 28 September 2010 | 17 Comments

Despite the doom and gloom about the economy, nearly a million employees can look forward to a guaranteed pay rise on 1 October.

Sick of reading bad news about the economy and the state of the nation's finances all the time?

Well, guess what?

For a change, we have some good news: nearly one million workers will be better off this week, thanks to an increase in the minimum wage.

The increase will come into effect this Friday, on October 1st.

Low-paid workers stand to gain as follows:

Age

New hourly

wage (£)

Old hourly

wage (£)

Change

(%)

21+

5.93

5.80

+2.2

18-20

4.92

4.83

+3.1

16-17

3.64

3.57

+1.9

The Trades Union Congress claims that two-thirds of minimum-wage employees are female, so around 670,000 women and 330,000 men will receive this pay rise. Since the minimum wage came into effect in April 1999, it has increased by 64%. This has helped to narrow the pay gap between male and female employees by around 5% in the past decade.

This year, for the first time, the age of eligibility for the adult rate of the minimum wage will fall from 22 to 21 – a significant benefit for the 40,000 21 year-olds in minimum wage jobs and internships.

Every little helps

Although these increases will be welcomed by low-paid workers, they won’t have anyone jumping for joy. For example, an employee working a forty-hour week at the highest minimum wage will only get an extra £5.20 a week before deductions. Then again, over the course of 52 weeks, this comes to £270.40 before taxes, which is better than a slap in the face with a kipper!

On the other hand, it’s sometimes said that “one man’s pay rise is another man’s price rise”. In other words, some companies may use the higher minimum wage as an excuse to pass on price hikes to their customers.

Other firms may decide to cut back, prune their wage bill and lay off some of their workforce. The British Chambers of Commerce attacked the Government back in March when the increase was announced, saying “it is astounding that the Government would increase the minimum wage by 2.2% at a time when private sector wages are virtually flat”.

This is missing the bigger picture. It’s a fact that low-paid workers spend a high proportion of their income on the bare essentials of living, such as food. While overall inflation has officially fallen to just 3.1%, the price of food has soared over the last year, particularly healthy food like fruit (up 10%), fish (up 8%) and vegetables (up 5%). This puts huge pressure on households with modest incomes. Hence, it would be churlish to complain about improvements aimed at those toward the lower end of the pay scale.

Apprentice pay will be covered for the first time

There's also good news for those working as apprentices. From October 1st, apprentices will be protected under minimum wage legislation for the first time, with a new hourly rate of £2.50 for those who were previously exempt.

Good news for the public purse

As well as workers, the 2.2% increase is good news for the public purse. The Low Pay Commission calculates it will benefit the public finances by over £238 million. This is because from October 1st, workers in receipt of the minimum wage will pay £101 million more in income tax and £53 million more in national insurance. The increase is also set to save the Government £84 million in tax credits and in-work benefits.

I want a pay rise, too!

What if you earn more than the minimum wage, so aren’t set for a pay rise this week or indeed, any week in the near future? Obviously times are tough, and many of us are fighting to keep our jobs, never mind trying to increase our pay.

Still, you never know, if you deserve a pay rise, it can often be worth at least asking for one – and at least then, you’ll know you tried your best. Read Six top ways to pick up a pay rise and Get a pay rise tomorrow for tips on how be successful.

More: 10 ways to slash your supermarket spend

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Comments



  • 29 September 2010

    I should point out that for quite a few years I was an employer, so I certainly know the economics of running a business. In the chilled and frozen sector where I specialised, I had to justify why I needed 'X' extra staff during certain times of the year, and how I could use natural wastage during the quieter seasons. In fact, during the summer months I bolstered my employee numbers with short term contracts or agency, boosting my already expensive wage bill to new levels. My only concession was that a hot summer saw ice cream sales explode. It is my experience that if you pay minimum wage, you get the people no other employers want, because someone who is good at what they do, regardless whether they are skilled or unskilled, will ultimately seek out an employer who offers just that little bit more. As for employing anyone, regardless of their intellect or common sense, everyone who is actively employed becomes a part of the consumer base (more so than someone on benefits). Bosses often scoff at paying too much, but that money eventually ends back in the bosses pocket. I should also point out that regardless of intellect, or academic background, almost everyone, from the humblest cleaner to the post graduate engineer, has something to offer society, so why treat those on minimum wage as subhuman? I have seen an illerate guy who was a genius with numbers. No formal qualifications, but give him two or more numbers, integer or floating point, and tell him to add, multiply, divide or subtract, and he could give you an answer quicker than entering it on a calculator. On the flip side of the coin, a colleague who studied engineering at university couldn't even do the simplest of tasks. Ask him to warm your cornish pasty in the microwave, and it would stump him. Using a TV was also a trial. Everyone is different, but almost everyone can offer something that someone else can use, whether it be honesty, unskilled labour, or a specific skill that they have trained for. On one of the business forums I have frequented, a group of managers were disputing the right of the ordinary employee to better themself. One quoted saying, 'They live with what they left school with', in response to academic training. I don't believe this is fair. People mature at different rates, and I have seen people in their 30's suddenly discovering that they have a gift for something, and want to expand their knowledge. I also know of people in their 50's who didn't have computer training when they were at school (computers didn't make an inroad into our lives until the early 80's), and who need to update their skills to compete with the younger generations. People are multifaceted. How can you possibly stereotype anyone. One of the last people I ever employed before moving on was an ex Manager for a bit retail outlet, yet he applied for a job as a warehouseman. I asked why the sudden change from a managerial role to that of a simple warehouseman, with no responsibility, and his response was that he no longer wanted to be responsible, and that he was more than happy just doing what he was told. Responsibility, and rank, is a burden, not a privelege. As a boss, we have a duty of care to ensure that employees under our care are looked after according to the law. This includes their health and safety, as well as mental welfare, and the job they do and the hours they work. I have seen many bosses, and some colleagues, who think that because they have the rank, 'Manager' tatooed on their skull, think it is a license to demean, belittle, and bully, those of a more junior rank. Finding a 'Good' boss is becoming harder and harder, as more and more idiots are aspiring to becoming managers. With the introduction of the Working Time Regulations, it became even harder to utilise a small workforce to fulfill the requirements of a much larger workforce, forcing employers to consider the true number of employees they actually needed, rather than offer, or force, overtime. So, if I say an employee needs 30 people, it is because he needs 30 people, to fulfill his obligation to his customers, or consumers. Mind you, retailers often try to skimp on retail staff. Pop into your local DIY store, and try to find an assistant? Almost impossible in some of the bigger stores. Also, long queues at the active checkouts because there are not enough staff to man all the checkouts. Call centres are another employer where they would rather we spend 20 minutes queueing on a phone line, than employ the additional staff required to fulfill their obligation to us. Of course, we have to remember that there is a difference between a customer, and a consumer. Customers are important, whereas consumers are ten a penny. A leading retail manager told me this, when I complained about their service. 'If you don't like how we operate, go elsewhere, because for everyone who complains, there are hundreds more who will accept whatever quality of service we offer, without complaint'. Bosses! Who needs them...

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  • 29 September 2010

    Maybe I read it incorrectly, but I think that the point straightseer made is that companies only have £x to spend so salaries for decent staff can't always increase, if you increase the minimum wage too far, more capable staff get lumbered into the minimum wage category and you effectively make the less capable unemployable by virtue of better being on offer. Put another way, many would prefer a BMW to a Renault, but opt for the French POS because it is the more affordable option, so sales are split between the two - if the minimum cost for a car were increased to the level of the BMW, no one would buy the an arse car again and we would either have acres of car parks full of them or (more likely) they would no longer be produced. Whilst stopping production of French motor cars would be a good thing, the same is not possible for people, as Hitler discovered that genetic cleansing is illegal and for the most part frowned upon. As a result if the minimum wage is increased too far we will end up with parks full of miscreants.

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  • 29 September 2010

    Whether you consider minimum wage as good or bad, there surely is no denying that the coalition's plan to raise the tax threshold to £10,000, to ease the burden for the poorest in this country, is a good move. Not only will it lift many out of paying tax completely but it should also mean savings in admin of benefits.

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