Minimum Wage with Maximum Dangers; Small Talk
Goodman, Fay, The Birmingham Post (England)
We have arrived at the day of reckoning.
The Low Pay Commission has recommended a minimum wage of pounds 3.60 per hour. Workers aged between 18 and 21 years would be paid pounds 3.20, and schooeavers aged 16-18 would be exempt.
But what does this mean for small businesses?
It has also been argued that pounds 3.60 was the figure most businesses could just about tolerate. So, why the concern?
Many unions have accepted pounds 3.60 with reservations. Nevertheless, now we have a minimum wage finding its way to the statute book, workers may start asking for a pay rise.
From an employee's standpoint I welcome a minimum wage, but looking from a small business and employer's perspective the view is very different.
This is not to say that most employers are opposed to paying a minimum wage, but running a small business is fraught with vulnerability, uncertainties and responsibilities.
One way to feed a growing business is to expand the workforce. This is good news for employment figures but can be a headache for the employer. The problem is the true cost of employment, especially in a firm's early years.
We have to consider Health and Safety Regulations, PAYE and Employment Law.
And what if this new employee's work is not satisfactory? Training may be the answer but many small businesses would argue they do not have the time or resources to do this.
Training is a key area to successful businesses and one which should be constantly reviewed. However, with the minimum wage becoming a legal requirement, my concerns are that businesses will have a disincentive to employ. Small firms might sidestep train ing by taking on people who are already well qualified, thereby reducing opportunities for people to learn a trade and gain experience.
We also have to consider the export and import market.
Britain is competing against some countries who pay very low wages. Whereas this may be morally wrong, it remains an economic reality because consumers drive the market by choosing from where they buy. Large companies like Marks & Spencer may be able to afford to pay well above the minimum wage, but small businesses cannot compete.
The result - we could be hit from both sides. …