National living wage will destroy jobs says ex-sainsburys chief

So how are people supposed to survive if their wages aren't enough to cover living costs?

Where does this guy think the additional money comes from?

What he's really saying is the government should continue to top up low wages and subsidise corporate business??

http://www.bbc.co.uk/news/business-34090038

Hes a piece of work that one.

Living wage not justified??

What a complete and utter dirt bag.

He is making some fair points, and I would like to see the rest of his speech rather than the snippets in the articles before he gets the mauling from the keyboard commenters.

A lot of what he is saying is making sense. An 11% sudden increase on every employees wage could have massive consequences (particularly to a smaller business). Its obvious that in the real world, Judy the Supervisor will also expect an increase on her salary if minimum wage Mavis on the till gets a leap in her hourly rate. People don't work for fun. Nobody is actually going to tell me with a straight face that if the entry level unskilled staff get a sudden increase, the rest of the workforce wont demand one too.

What could that result in? Reduced hours, reduced service, less customers, less staff.

NOW, before everyone jumps on me, I am not saying that low paid workers shouldn't be given a FAIR income, however, I don't agree with the delivery of a sudden increase in the figures we are seeing.

Here is an interesting quote from another article about Tesco's wage bill:

The UK wage bill at Tesco, Britain’s biggest retailer, is about £4.5bn, which indicates that every increase of 1% to wage costs would cost the company about £45m. The first increase in the national minimum wage to £7.20 represents an increase of almost 11%.

So for a big company like Tesco, the new law is going to cost them around £495 million pounds.

Of course these are only ball park figures and Tesco will have lots of variables, but just think about that amount. Scale that all down to a mid size company and scale it down again to a small operation and you can see quite an impact.

Say I run a small 10 bedroom hotel and I have a cook, receptionist, porter and cleaner all on minimum wage. I have a night manager on a higher rate of £20k a year. That's an annual gross salary cost of £70070.

Minimum wage immediately goes up and my manager then wants a pay rise to compensate and my salary bill then jumps to £81160. That increase is approaching the same figures as the annual salary of one of my minimum wage staff.

Now, what would a businessman be thinking.... Scale that up for bigger businesses and Mr King may just well have some points.

Of course, its falling on deaf ears because most people wont get past the first two paragraphs before they label him "toff" "tory" "parasite" "scum" "out of touch"...

They probably wont even notice the part where it states that Sainsburys are already paying their staff above the current increased wage rate.

At the end of the day he is a businessman and he was giving a speech to a business programme about the topic of "future of the workplace". He is providing an OPINION on what the future world of business may look like. Its a dirty scummy morally wrong life but, newsflash, business is about making a profit. That's why people set them up. That's the only reason people keep them going. Its not a community service. We customers are completely ruthless when it comes to our spending habits so I never get why we are so outraged when businesses do the same. Does the vast majority of the shopping population really give a flying fig about HOW Primark makes their clothing so cheap. How does Aldi and Lidl manage to keep their product prices so low. Yes, they do pay a higher than average wage, but they also employ about 1/3 of a staff of a normal supermarket. Hardly good for the local jobs market is it?? Yes, Primark/Poundland/Poundworld do employ lots of staff, but look at the hours/targets/demands they have on their workload to keep us customers happy and the stores stuffed to the brim with products.

It works both ways. We are part of our own problem. Companies wanting to keep wages low? Consumers demanding the bottom line price?

So how are people supposed to survive if their wages aren't enough to cover living costs?

Exactly the same way they managed for decades before the NMW existed.

He is making some fair points, and I would like to see the rest of his speech rather than the snippets in the articles before he gets the mauling from the keyboard commenters.

 

A lot of what he is saying is making sense. An 11% sudden increase on every employees wage could have massive consequences (particularly to a smaller business). Its obvious that in the real world, Judy the Supervisor will also expect an increase on her salary if minimum wage Mavis on the till gets a leap in her hourly rate. People don't work for fun. Nobody is actually going to tell me with a straight face that if the entry level unskilled staff get a sudden increase, the rest of the workforce wont demand one too.

 

What could that result in? Reduced hours, reduced service, less customers, less staff.

 

NOW, before everyone jumps on me, I am not saying that low paid workers shouldn't be given a FAIR income, however, I don't agree with the delivery of a sudden increase in the figures we are seeing.

 

Here is an interesting quote from another article about Tesco's wage bill:

 

The UK wage bill at Tesco, Britain’s biggest retailer, is about £4.5bn, which indicates that every increase of 1% to wage costs would cost the company about £45m. The first increase in the national minimum wage to £7.20 represents an increase of almost 11%.

 

So for a big company like Tesco, the new law is going to cost them around £495 million pounds.

 

Of course these are only ball park figures and Tesco will have lots of variables, but just think about that amount. Scale that all down to a mid size company and scale it down again to a small operation and you can see quite an impact.

 

Say I run a small 10 bedroom hotel and I have a cook, receptionist, porter and cleaner all on minimum wage. I have a night manager on a higher rate of £20k a year. That's an annual gross salary cost of £70070.

 

Minimum wage immediately goes up and my manager then wants a pay rise to compensate and my salary bill then jumps to £81160. That increase is approaching the same figures as the annual salary of one of my minimum wage staff.

 

Now, what would a businessman be thinking.... Scale that up for bigger businesses and Mr King may just well have some points.

 

Of course, its falling on deaf ears because most people wont get past the first two paragraphs before they label him "toff" "tory" "parasite" "scum" "out of touch"...

 

---------- Post added 29-08-2015 at 12:09 ----------

 

 

Exactly the same way they managed for decades before the NMW existed.

Truth in what he says. I believe it will stall possibly damage growth. Really so what? This is the time of austerity.

The truth is less people will be taken on and the staff who are left will be expected to pick up the productivity slack. That's how capitalism works.

But that's a business problem. Organisations are going to have to find ways to integrate a higher pay structure instead of moaning big brother isn't subsidising anymore.

The same argument was used when someone suggested ending slavery.

Its a dirty scummy morally wrong life but, newsflash, business is about making a profit. That's why people set them up. That's the only reason people keep them going. Its not a community service.

We are a capitalist society of consumers. Expecting the business world to make reflexsive ethical decisions for social good is a loser of an idea to begin with.

A law comes in, and they will find a way to circumvent If it means profits suffer.

---------- Post added 29-08-2015 at 11:28 ----------

The same argument was used when someone suggested ending slavery.

It's the natural way. Maybe a culling is what's required.

What I expect is businesses will just want more staff time and energy. It won't end well for workers.

So for a big company like Tesco, the new law is going to cost them around £495 million pounds.

Not necessarily as they can offset that extra cost against their profits which are still very good. The have in the past managed write-offs of £7 billion and also have put £270 million a year into its pension fund to close a £2.8 billion deficit.

The answer is emancipation from corporations.

But I know that's not helpful for many.

---------- Post added 29-08-2015 at 11:32 ----------

maybe this will be the red flag for the next recession....maybe then a whole rethink will occur and we will finally realise the system is broken.

An 11% sudden increase on every employees wage could have massive consequences (particularly to a smaller business). Its obvious that in the real world, Judy the Supervisor will also expect an increase on her salary if minimum wage Mavis on the till gets a leap in her hourly rate.

 

I can see a need for a higher than minimum wage, in the whole public sector and large companies, but this increase will be a major rise and difficult to handle.

Will there be more strike action to maintain differentials, companies struggling to cope with increasing costs, will it lead to more under 25s being employed.

I think there's a danger of under 25s being a lost generation

I think there's a danger of under 25s being a lost generation

i think there is a danger that this forum has been hi-jacked by a one man communist propaganda coup. it is starting to sound like a cuban cigar factory.