Minimum wage is a term used to define the minimum amount of money an employer is required to pay the wage earner for the work that is performed during a given period. The wages are set by the wage board, wage council, the competent authority, or labor courts or tribunals. The purpose of this minimum wage is to protect workers against low pay. This is to make sure that the workers get their share of the fruit that they have worked for. Minimum wage is one of the elements of policy that helps reduce inequality and helps overcome poverty. The help in inequality is to provide equal workplaces and wages for men and women. The national minimum wage was first introduced in 1998 in the UK; this act was put in place to help low-paid workers from exploitation. There is no accepted argument about what low pay is or what the minimum pay should be.
Ethical issue – This is ethical because with being paid fully people can afford to have a nice life. It also prevents slavery and poverty. This is one of the things that separate working-class people and slaves. It prevents people with no skills to get a job at a low price. Most employees have wages which is above the minimum rate so the law does not prevent the wage from adjusting. Having a minimum wage makes sure people get jobs. This law mostly matters to the least experienced members of the labor force, for example, teenagers. This is an ethical issue because when the salary increases most of the small business owners cannot afford to have a higher payroll and without the minimum wage, people may be forced to work overtime or multiple jobs, placing the kids into work rather than school, they will be denied basic human rights to nutrition, housing, health, education, food which can lead to deprivations. Everyone has their own opinion on this Act depending on their personal view and their job status. As an employer, they would want the minimum pay to be lower to keep the costs down but being an employee would want the wage to be as high as possible to have disposable income. It is very easy for people to be discriminated against if the workplace does not have a minimum wage which can lead to a very poor lifestyle.
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Case study - A friend of mine (Nisha) was working for a care home in 2014. She was 23 years old at the time. The ongoing minimum wage at the time was £6.50 per hour for people aged 21 and over. She worked there for just over two years. Her hourly pay that she was receiving was £5.00 per hour which was £1.50 less than the minimum. She didn’t realize she was paid less until one day she spoke to her colleague about the pay raise and asked what pay she was receiving, the hourly pay for her friend was £8.00 as she was a senior worker. This still didn’t make sense how she was treated differently even after two years of dedication to her work. She then went to her manager to get an explanation and she was told that she was not experienced when she started working for the organization and she was provided with the training by the company free of charge. She was also offered to do a course in health and social care provided by the company. She came home and researched what her options were and with the research, she found out that the free course she was offered was funded by the government and not the company, and every employee is eligible for free training when starting a new work even if they have experience in the field they are still eligible for training. She went back to her manager to explain her research and the manager just ignored her. She then decided to go to the owner of the care home explain everything to him and request a pay raise. The Owner did not pay attention to her and just said that he would have a meeting with the manager and let her know. She was then given a few days off from work as holidays. When she came back she was offered a pay raise of £6.00 she accepted the offer even though it was not the minimum wage she carried on working there for a few months and around that time the minimum wages were increased by the government to £6.70 so the company had to evaluate again. The company decided to reduce her working hours from a 10-hour shift to a 6-hour shift and after a few more months, she was let off work saying that the work was not as busy as expected so we had to let you off. She knew the reason for this was the rise in minimum wage. She was given notice for 1 week to leave work and within that time she contacted the HMRC and her lawyer and explained her situation about how she was underpaid for over two years and now she is being fired. The lawyer took her case to court and she sued the company for wage discrimination. The court fined the organisation and she was provided with £10000 which was paid by the workplace and the company was also fined by the HMRC.
Utilitarianism -. This theory looks at all the fair choices to make sure very little harm is done to all of the parties. This theory requires you to decide which actions are right to take and what the outcome of it will be. It makes you make the decision based on the benefit or harm that the actions can cause without thinking of the cost of the action. An example of this will be if a person walks in a hostage situation with 10 people and that person is told that if she kills one person she can save the life of the rest of 9 people. This theory would encourage the person to kill that one person so the other lives can be saved, even though one of the people will lose the life. This theory relates to the case study because Nisha was paid less pay before and the rest of the employees were paid a minimum amount also when the wage was increased by the government all the rest of the employees were given a pay raise which was the greater good but from Nisha's perspective, she lost her job for the company to keep the rest of the employees.
Just like the example, the theory helps employees be in the greater good and get fair pay even if they are unskilled or unqualified but being employer this is why some people might view this theory as unfair because if we consider the employee point of view for the minimum wage is fair as they get paid fully even though they might not have enough experience but with employers, they have to hire people with no experience and provide them with free training and still pay them the full minimum wage. For example, a company has 50 workers and their wage is £8, 00 per hour when the wage increases to £9.00 from £8.00 the difference of £1.00.
50 workers x £8 per hour = £400 per person. If due to the wage raise the company has to let go of one person then 49 workers x £9 =£441. Somehow both of the parties are affected in this case because 1 person lost the job but still the company has to pay more money even after letting go of the person. People do wonder if it is worth it.
National Minimum Wage Act 1998 – This act was introduced in the UK in 1998. There was no law regarding the wage before 1998. It is a legal requirement for the employer to pay the employee the national minimum wage and if the employer fails to do this then Her Majesty’s Revenue & Customs (HRMC) has the right to take employers to court. The effect of the minimum wage depends on whether the minimum wage is binding or non-binding.
Non-binding- The minimum wage is not binding if it is below the equilibrium rate. No one wants to work or pay for the wage that the below the minimum. This means that the market forces and the forces of the law will not conflict.
Binding – Binding minimum wage is binding if it is above the set wage. The market forces and minimum wage law are conflicted in this case. Adjustment to the minimum wage will not be possible with a binding minimum wage. In the competitive labor market, the minimum wage that is above the equilibrium wage decreases unemployment. However, this does not occur in all types of labor markets.
In my opinion, the increase in the salary can help significant productivity improvements, the employees will stay longer with the same employer and can also reduce turnover. The employers tend to establish a team that is committed to achieving the goals and they have a vision of the company to achieve success, this is one of the reasons why 47% of the employers favor the increase of minimum wage. When the employees receive more salaries they are more dedicated to the work and employers benefit from the work. Sometimes it can cause economic stress to the business but having efficient workforce management can help companies turn the extra labor cost into more productivity and long-term benefits.
My approach is that everyone in the company should be paid equally as it is not fair to discriminate against employees on who gets more or less. The manager should give Nisha the minimum wage as she had worked for the company for over 2 years moreover she should have been given a raise in her pay and for her dedication on top of the minimum wage. If I was the employer I would provide all my employees with the minimum wage and in return, I would expect the employees to give 100% dedication to the work.
I know that the increase in the wage can also have disadvantages as according to my research people have reported having their hours cut due to the increase but there were 1.36 million people unemployed in the UK in September 2018 and this has fallen by 95,000 since September 2017. The employment rate from November 2018 to January 2019 was estimated at 76.1% which is higher than November 2017 which was 75.3%. There were around 3.9% of unemployed people in the proportion of all the people who were employed and have not been lower from November 1974 to January 1975. The number of self-employed workers also decreased by 46,000 to 4.8 million. This was the lowest unemployment rate in over forty years.
Current rates - In the United Kingdom, the wage rates are reviewed in April every year. Below are the current rates of the year 2020 and the previous year's rates of 2019.
Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2020 (current rate) £8.72 £8.20 £6.45 £4.55 £4.15
April 2019 to March 2020 £8.21 £7.70 £6.15 £4.35 £3.90
Conclusion
The national minimum wage should be increased even though it can cause unemployment but work should have dignity and this means employees getting paid enough to live a healthy lifestyle. In my opinion, this is an ethical issue because it prevents inexperienced people from getting jobs at a very low rate and it will help people gain experience and skills for a greater wage in the future. If the minimum wage act is not there it will shut people with no experience out of the labor market, which can lead those people to work illegally or for gangs which force them to lead a life of crime. This can be seen as unfair as the only people who will benefit from the minimum wage will be the people who are employed. Unemployed workers have to work very hard to look for new work. In my opinion, Minimum wage is a very good idea because people are treated the same and with fairness and they will all get the same wages, and there will be less discrimination or favoritism. Minimum wages can have complications in the economic environment in the future because if the wage increases that could mean the prices of the products will also increase which can lead to a higher cost of living.
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