I was amused by this comment by David Lucas on the blog, offered I think, a little tongue in cheek but not wholly inappropriately:
If we had a statutory living wage, that all employees were entitled to, the whinging employer who claimed they could not ran their business efficiently enough to pay them, should be allowed to claim a government subsidy. Lets call it a government subsidy, not a tax rebate. Why should they be given a tax rebate? This would of course replace tax credits. If there were suspicions that the employer was a malingerer they would have to account for themselves to ATOS. We would then know who the real scroungers were, and the Daily Mail would have a good story that might be worth reading.
The logic is sound: it is these employers who are really claiming benefits from the state in the form of a subsidy for their staff costs from which they seek to profit. And we should name them for doing so.
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There is no state subsidy for staff costs – tax in UK is based on profit, not revenue.
Staff costs are an element of operating cost which impacts on operating profit.
A common argument from the so-called “civil society is that the state subsidises every cost incurred by a corporate taxpayer, but one that is totally wrong. I cannot believe you still put forward this silly hypothesis.
If staff are paid a wage that they cannot live on and need benefits that is a subsidy – pure and simple
“There is no state subsidy for staff costs”
Try telling that to those employees who have to put in expenses claims to the taxman because their employer does not reimburse them!
“Staff costs are an element of operating cost which impacts on operating profit.”
Strange how employers are not so quick to mention the greater productivity rates they gain from new machinery and new working practices.
Through this, employers might gain a productivity rise of 5 to 6 percent while employees may be lucky to see a cost of living rise to their wages of 2 or 3 percent.
I disagree Richard, employers aren’t at fault it’s the customers! A sizeable number of my clients are in the hospitality industry (pubs, cafes, hotels and restaurants). They don’t make “excessive” profits.
If the public demands a living wage they are going to have to pay more for their drinks, meals and accommodation (to name just one sector of the economy).
Even the big pub companies are struggling. More salary costs will only push up process. Affecting everyone who is supposed to be gaining from the system.
Not all companies are making lots of money.
No, but suppose their employees had more money
Then, as Henry Ford noticed, they could afford to spend
The business rates seem to go up faster. They have every year since 2000
Stuart -more and more people cannot afford to eat out at all-if people are paying absurd costs for housing themselves then how can they pay for meals out and pubs which begin to look like an utter frivolous expenditure if you can’t afford to heat your home and pay rent whilst in work! In this peak prosperity world businesses may need to adapt their services to REAL need!
Name how many Restaurants and Pubs, particularly the big ones, make less than £2000 per night!
Most of the small ones.
I am whole-heartedly behind the living wage, but I have also spent most of my working life in the licensed-retail industry and I can tell you with confidence that an immediate introduction of the living wage would see the demise of much of what remains of the independent side of the industry.
It is naïve to conflate turn-over with profit margins- wet sales typically come in at around 12.5% profit margin, and turn over is often as low as a couple of hundred pounds per day early to mid-week
The industry, in case no-one has noticed, is dying on it’s back-side with as many as a thousand pubs a week closing nationwide. Undermined by the smoking ban, cheap supermarket alcohol, greedy landlords (who for the most part are doing very nicely selling off closed pubs to property developers), and the recession, most small publicans work anywhere between 60-100 hours a week, usually for much less than the minimum wage.
Much of what has been written here is both ignorant and divisive, and I am frankly disappointed that so many commentators are so quick to go after SME’s, when the real problems stem from the National and Multi-National corporations that just suck money out of our society without giving anything back.
If what we want is simply to hand everything over to ‘Big’ businesses then the attitudes displayed here are a good place to start.
Yes to the living wage. Yes to tax justice. But can we start by dropping the ‘them and us’ attitudes towards ALL employers, and perhaps, levelling a few playing fields first.
I have a tendency to agree re SMEs
Ed Miliband is moving in the right direction on this issue – but has some way to go
“If the public demands a living wage they are going to have to pay more for their drinks, meals and accommodation (to name just one sector of the economy).”
I seem to remember the same rubbish being spouted when the minimum wage was introduced. “Prices would go up and it would cost jobs!”, they whinged!
Not surprisingly, the doom-mongers were wrong and statistics prove that, far from losing jobs, the NMW created them. Why? Because their was more money in circulation that helped drive business. One of the most proven ways to get an economy moving is to put more money into the hands of ordinary working people, who will spend it, rather than hoard it.
The more money in circulation in the real economy, the better off we are!
“t is naïve to conflate turn-over with profit margins- wet sales typically come in at around 12.5% profit margin, and turn over is often as low as a couple of hundred pounds per day early to mid-week”
Oh please! A back street pub, even on a slow day, can usually have 100 people passing through its doors in the course of one day. If they all bought an average of 3 pints, (an unusually small number) that would be £750 turnover in one day and, as most pubs are open every day of the week, that would equate to £5250 a week! Even after paying for stock and various taxes and wages, you would probably still turn over a decent profit. I’m getting a bit tired of these businesses claiming that they’re practically a not for profit charity.
I do understand as a result of the recession, many small pubs and restaurants have gone under through too much debt and being based on an area of high unemployment. I do believe though, that there is a significant minority that love to moan about having to pay decent wages and business rates. I don’t deny that this will be true for many of them, but let’s be honest! Many pubs and restaurants do very well, thank you very much!
Also, how many of these pubs and restaurants are independent, family run businesses? There are huge numbers ran by corporate chains and multinationals! They are not exactly struggling to get by, are they?
Another thing…if you cannot afford to pay decent wages, then you shouldn’t be in business.
Well said Dave.
Tax credits and housing benefits are there for the good of low pay employers and rentiers. These are Speenhamland like schemes put in place to subsidize exploitation and prop up inequitable economic relationships. Who are the true Benefit scroungers?
“I have a tendency to agree re SMEs
Ed Miliband is moving in the right direction on this issue — but has some way to go”
I can’t agree when one of his ideas is to subsidise low pay through taxation, allowing employers to get away with poverty wages!
Any wage rise usually means a business will claw back that money through price rises anyway, so why should they be bribed to pay proper wages?
What many need now are cheap restaurants serving nutritious food – The hare Krishna group have been doing this for years – I used to visit one some years ago-there was one nutritious vegetarian meal available and people paid a basic amount -business will have to adapt to the new poverty, cut down on profit margins and offer a service that helps people. A person on JSA, or a working person hit by the bedroom tax cannot afford to buy pints of beer at £2.50-£3.00 a time.
Wont pay rises mean more inflation which will then affect everyone.
If Ford gave his staff enough money to buy the car. Does Aston Martin have to give me enough to buy one as well.
Real wages are falling
There is not a hope of real wage inflation right now
Inflation is most often caused by bank lending, NOT by wage rises as the powers-that-be would like is to believe.
If consumption can get as close as possible to productivity, there should be no real inflation at all!