Essay on Is Minimum Wage Supposed to Be a Living Wage

The National Living Wage (NLW) was introduced in 2015 and to be eligible to earn it you must be 25 years or over. Several people are not allowed to gain the NLW. A few of them are those who are self-employed, volunteers, and those who are a part of the armed forces.1 “It ensures that work pays, and reduces reliance on the state topping up wages through the benefits system.”2 This ensures that the employers are paying their employees practical wages so that they can afford to live on their own without government help. This can help to examine the impacts of employment and poverty within the UK due to the National Living wage being introduced.

The difference between the National Living Wage and the National Minimum Wage (NMW) is that the National Living Wage is calculated by looking at how much staff is required to live. Whereas the National Minimum Wage is set at a level that is reasonable for the business to pay employees. Originally when the National Living Wage was introduced it was 50p more than the National Minimum Wage. This meant that a full-time worker who had previously been earning the NMW would now be receiving an extra £910 per year through earning the NLW.2 Therefore, due to the government establishing the National Living Wage, the employees will be slightly better off than before but that doesn’t automatically mean that they will be able to live in better conditions.

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A survey carried out by The Living Wage Foundation, along with the Cardiff Business School discovered that “93% of real Living Wage businesses have benefited since accrediting”.3 This shows that businesses are gaining more due to being able to give their employees the National Living Wage. The survey also revealed that 86% of those who responded believed that the organization’s reputation had been enhanced as an employer.3 This suggests that the NLW has helped to improve the way people view the organization by showing that they are respectably treating their employees by treating them fairly and giving them good pay. The survey also revealed that the relationship between staff and managers is being improved.3 This could be due to the employees feeling more valued within the organization because they are being given pay that reflects their hard work. It may also give the employees more confidence in communicating with their employers which has helped to establish the improved relationship between the two.

The National Living Wage will have little impact on poverty as there is much more that will need done other than just raising the NLW. This is because there needs to be a joint contribution between employers, the Government, and communities. The government and employers both need to work together to keep the poverty level down by introducing different schemes and strategies to target and get people into jobs.4 This would therefore allow workers to gain a sufficient amount of money due to them all working together. It would allow for pressure to be taken off one of the groups as they would all be working together to come up with the best solution.

Although the number of parents who are at work is increasing, the income that they are receiving is not suitable enough for them to give their families the best life and keep them from living in poverty.6 For the families to get themselves into better conditions, the employers need to give their employees the National Living Wage so that they have the best chance to bring themselves out of poverty. This could give the employees the motivation and determination that they need to get them to come to work more often and put in the effort and maybe raise them to a higher job within the business. The impact this would have on poverty is that it will hopefully reduce the amount of poverty as people are gaining more which can contribute to their living environments. It will enable them to grow and care for their families more and give them a better life than previously.

A report has outlined that The National Living Wage is helping to target and get those who are more likely to earn the NLW into employment. Those in that category are people who do not have any qualifications, those who were not born in the UK, and workers who have a disability.5 This shows that because of the National Living Wage, workers who before were unable to get good jobs and pay, are now being given a new chance and the pay they deserve. These groups may have been considered unable to do the work that others are doing and that may be why they are benefitting more from the living wage being established. This is because they are now becoming more involved in society due to having the chance to take on the same roles that others are doing. It will have a greater impact as it is giving them the best chance they can to stay in employment and feel a part of the community that they are in as before they may have been left out from everyone else.

The report included that the employment level has significantly risen from 2014 where it was 30.5 million to now being at almost 32.5 million in 2018. Also, the report presented that the unemployment rate has dropped to just under 6% since its peak in 2012 when it was almost at 11%.5 Although this shows that a change is happening within employment, it does not necessarily mean that it is occurring due to the National Living Wage being initiated. The unemployment of workers may be reduced because more jobs are being created and not because the NLW is helping. However, the NLW could be impacting the employment rate as those who are unemployed and are looking for work may be more inclined to look harder as there is potential to earn money that they would not have been able to earn before.

Even though there have been a lot of impacts made by the National Living Wage being introduced, more time still needs to be given to see the full potential of it being established. This is because it was only initiated a few years ago and you cannot completely tell what its true impact will be until it has been around for longer. It has however given employees who are in poverty a chance of getting out of it. Also, it has allowed employees who were earning a low wage rate to gain more and become more active in their work.

References

1. The UK Government, The National Minimum Wage and Living Wage, Available at https://www.gov.uk/national-minimum-wage/who-gets-the-minimum-wage
2. The UK Government, (2016), Policy Paper National Living Wage (NLW), Available at https://www.gov.uk/government/publications/national-living-wage-nlw/national-living-wage-nlw
3. The Living Wage Foundation, (2017), The Living Wage is Good for Business, Available at https://www.livingwage.org.uk/good-for-business
4. Helen Barnard, (2016), The National Living Wage is welcome, but it won’t solve in work poverty alone, Available at https://www.jrf.org.uk/blog/national-living-wage-welcome-it-wont-solve-work-poverty-alone
5. Low Page Commission, (2018), Low Pay Commission 2018 Report Summary of Findings, Available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/770466/LPC_2018_Report_Summary_of_findings.pdf, Page 5
6. Liam Geraghty, (2018), The National Living Wage is still not good enough for working families, Available at https://www.bigissue.com/latest/the-national-living-wage-is-still-not-enough-for-working-families/