Low pay in the UK
Causes problems for workers:
- Working poverty is a growing problem in the UK, and employment is no longer a way out of poverty. For example, effects on health, happiness, time with family.
- Low-wage workers are less likely to get job benefits and training, and they are more likely to have jobs that aren’t safe.
- Dead-end jobs: Only a small number of low-wage workers move up to jobs that pay more.
Causes problems for companies:
Low pay is not a good thing because it hurts business and the economy:
- Fiscal: More transfer payments and less money from taxes
- Demand: less demand and too much credit used
- Productivity: In liberal economies, low pay and low productivity go hand in hand.
Students should be aware that the problem of low pay in the UK is having a serious impact on both individuals and businesses. In particular, the employee strikes of recent years are serious.
Methods to regulate the low pay
Method 1-Statutory regulation
Basically, this means that the government sets a minimum wage that everyone must get.
- In 21 European countries, a relatively high minimum wage is linked to a relatively small number of low-paying jobs.
- The NMW went up for 1.3 million workers (5.1%).
- Pay distribution was tightened, and a trend toward income inequality was stopped.
This method failed to reduce the number of low-paying jobs until the NLW appeared.
Method 2-Joint regulation:
Employers and trade unions negotiate wage agreements that raise the pay of low-wage workers.
- Low pay is linked to union density, collective bargaining coverage, and centralised bargaining, all of which are bad.
- It’s less likely that unionised workers will get the National Minimum Wage or get paid less than the Living Wage.
- Unions narrow the pay gap by raising the pay floor.
- Women, people of colour, the disabled, and those with low skills benefit most from joining a union.
As a matter of fact, unions are falling in every developed country nowadays.
Method 3-Private regulation
- CSOs come up with a living wage standard on their own.
- Campaigns for a living wage can help raise the standard.
- Get employers to pay a living wage on their own.
- Employers should be named “Living Wage Employers.”
- Most employers report positive effects. Overall, the company has a good reputation and is a good employer. In addition, it help companies to bring in customers and get money.
- Also, employee gain motivation in the business world
- The level of impact is very low. Costs of labour have gone up.
- About 10% of LW employers have stopped being certified.
69% say that their wage bill has gone up. Besides, the bill for subcontracting went up by 32%.
- Changes in pay structures. For examle, supervisor and other pay differences are being taken away.
- Leaving pay decisions up to the LWF: Living Wage rates are set by the government and not by employers. Additionally, the Living Wage is going up faster than the average wage and also getting more expensive and more troublesome. Also if you give up your accreditation or don’t follow the rules, you’ll get bad press.
- A “shadow Living Wage” comes into being.
Students should consider the effectiveness and ineffectiveness of the three approaches when discussing solutions to the problem of managing low pay in the UK. Moreover, students should pay attention to the links between the three approaches. As a result, a combination of all three approaches can help companies managing low pay problems, rather than using only one of them.