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Minimum wage frozen for young people

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    Minimum wage frozen for young people

    The National Minimum Wage rises by 1.8pc for adults this October but is frozen for 16 to 20 year old over concerns that it is damaging job prospects

    Young people will see their take home pay fall in October after the Government froze the youth minimum wage rates over concerns that they were hindering job creation.

    Vince Cable, the Business Secretary, said it had been a “very hard decision” but the one million under 25s who are out of work would benefit if more jobs are created.

    “In these tough times freezing the youth rates has been a very hard decision – but raising the youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run,” he said.

    The adult rate rises 1.8pc or 11p an hour to £6.19, while the rates for 18 to 20 year olds stay at £4.98 and those for 16 to 17 year olds remain at £3.68. However, the rate for apprentices jumps 5p to £2.65 an hour.

    The Business Department has held concerns over the negative impact of rising labour costs at a time of high unemployment, arguing in its evidence to the Low Pay Commission, the independent body that recommends the minimum wage rates, that the trade off between pay and work should be examined carefully.

    “There are also extra reasons to be cautious and moderate in recommending NMW rates for young people,” BIS said. “Evidence suggests that labour market outcomes of younger workers are more at risk from the uprating of the NMW.”

    David Norgrove, the chairman of the LPC, said it was “unanimous” in deciding to freeze the youth rates. “The commission was again unanimous, despite all the economic uncertainties and the different pressures on low-paid workers and businesses. We believe we have struck the right balance between the needs of these workers and the challenges faced by employers.”

    The British Chambers of Commerce has said aid that the minimum wage should be part of the effort to reinvigorate the economy. Adam Marshall, director of policy at the BCC has called for a freeze in the youth rate of the minimum wage and a consultation with employers about a gradual reduction in the rate.

    However, TUC General Secretary Brendan Barber said: “It is wrong to deny young people an increase this year, as there is no evidence that the minimum wage has had an adverse impact on jobs.

    "The reason why firms have not been hiring enough new workers is because they lack confidence in this government’s ability to set the UK on course for a sound economic recovery.
    Discuss.
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    Meanwhile, in government.

    http://www.belfasttelegraph.co.uk/ne...-16131495.html
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    In theory, the min wage pushes those who's productivity (not value) does not meet the min wage set by the state, so you push young'ens out of the market, or simply price out people with low/no skills, or are just starting out.

    This may cause a spike in employment at the very low end, as with in-time recession/slow economic growth inflation, small and medium business are made poorer. So essentially, the businesses are in the same position as the were before this freeze, so I don't think competitive employment will increase. Additionally, people who are currently on or around the min wage, will likely spend less money with the pay freeze, and what is most likely, is that those who are slightly above the min wage, will be brought to its level. With increased taxes on productivity and spending recently, consumer spending will also fall, so less revenue for business = less employment.

    I think min wage cuts or the abolition would only really work in booms/steady growth. For this to work in the slow growth/recession, they would have to cut it severely in a recession, instead of freezes to see any increased employment at the bottom end, however, those slightly above the min wage, will lose out either way.

    It's all centred on the effects of inflation on businesses during slow growth/recession.
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    Funny enough I trust the economic evaluations of those employed to make such decisions more so than the TSR kids on here who think they have a better idea, so given the reasons are fine I don't see why this the decision is a problem.
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    And all the while, parliamentary ministers enjoy a salary commensurate with maintaining a very comfortable life-style.

    One might be able to take them seriously when they claim "We're all in this together if they set an example and took a hefty pay-cut in addition to a short-term pay freeze.

    As an example of moral leadership, the Irish government ministers made a voluntary offer to a 10% pay cut in 2008, followed by a 20% pay cut in December, 2009. And yet cabinet ministers in this country suggested a paltry 5% cut in salaries despite the fact that nearly all of them could have high standards of living without receiving a penny from the state. I seriously think that the example they should be setting is to receive a 'pepper-corn' rate of pay especially since they comprise multi-millionaires in their own right.

    In the interim, the gap between the richest and the poorest widens ever greater. The rich continue to get richer (courtesy of a sympathetic government who benefits from their patronage and donations) and the poor get poorer (courtesy of a government that has nothing to benefit from them...and knows that few people are interested enough in their plight to mount a vigorous campaign against a neglectful leadership.

    Is there no integrity in cabinet politicians?Ed

    Edit:
    Lest we forget, economists have political biases that determine their economic opinions. So, depending on which side of the fence they sit politically, economic pronouncments will be affected by those same biases with resulting diametrically opposed solutions. Who said that people should never argue about politics and religion? We should also be including economics to make a trio of contentious areas of debate, particularly in the current time.
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    The most ingenious, and deceitful, way to deal with youth unemployment is to raise the minimum wage of adults to say, £10/hour.
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    (Original post by prog2djent)
    I think min wage cuts or the abolition would only really work in booms/steady growth. For this to work in the slow growth/recession, they would have to cut it severely in a recession, instead of freezes to see any increased employment at the bottom end, however, those slightly above the min wage, will lose out either way.
    One of the things that is very contradictory, although they make contradictions their business, about Keynesians is that very often they are advocates of the NMW. They usually argue that some kind of useless study shows it does not cause unemployment.

    Yet when it comes to macro economics they blame recessions on sticky wages downwards. Namely that in times of recession labour it not utilized because wages do not fall. Therefore causing unemployment. So one would expect the solution they would offer would be to make wages as flexible as possible. Instead they often advocate legislation that makes damn sure that wages are rigid downwards, such as the NMW.
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    (Original post by yawn)
    As an example of moral leadership, the Irish government ministers made a voluntary offer to a 10% pay cut in 2008, followed by a 20% pay cut in December, 2009. And yet cabinet ministers in this country suggested a paltry 5% cut in salaries despite the fact that nearly all of them could have high standards of living without receiving a penny from the state. I seriously think that the example they should be setting is to receive a 'pepper-corn' rate of pay especially since they comprise multi-millionaires in their own right.
    Do you not realise that the reason MPs and ministers are paid good salaries is precisely to enable people of modest means to achieve office? No doubt most of the current lot could live of their investments and savings, but reduce the salary and you only make it even more difficult for poor or working class people to enter politics.
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    (Original post by JacobW)
    Do you not realise that the reason MPs and ministers are paid good salaries is precisely to enable people of modest means to achieve office? No doubt most of the current lot could live of their investments and savings, but reduce the salary and you only make it even more difficult for poor or working class people to enter politics.
    Correct, the other thing to consider is to what extent ministers and MPs would go into corrupt practices or start accepting bribes if the wages aren't high. Though obviously the high wage doesn't stop it completely but it would be a lot worse if they were paid peanuts.
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    I am for this and believe that if anything, they have not gone far enough.

    While i do believe in 'a' minimum wage, the fact is that since its inception it has risen well above inflation almost every-time. On top of this, we had the recession and now a slow recovery.

    They should extend the 18-20 to 18-24 and on top of that cut all minimum wage rates back to the levels of October 2006 (raise the aprrentiship rate to £3).
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    Why should the lawmakers of this country not be paid huge amounts? It sickens me when lefties condone a merit based pay structure but then whinge that parliament gets paid too much.

    As far as i am concerned, they deserve every bit of that money and infact more.
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    (Original post by Rakas21)
    Why should the lawmakers of this country not be paid huge amounts? It sickens me when lefties condone a merit based pay structure but then whinge that parliament gets paid too much.

    As far as i am concerned, they deserve every bit of that money and infact more.
    I agree. It just shows the in discriminant nature of their hatred and stupidity.

    One of the great ironies is these people condemn politicians for high wages (although compared to how much effort MPs put in and how skillful these people are, the wages are pittance) whilst at the same time complaining only rich people are in government.

    Well how do you expect people without a huge endowment of wealth to be MPs when the MPs are underpaid? How do you expect poorer folk from the North to be able to afford to have two homes and commute into London regularly?The very people these lefties want in power. And yet the lefties will sometimes invoke policies that lead to precisely the opposite consequences of what they desired. Standard.
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    (Original post by Rakas21)
    I am for this and believe that if anything, they have not gone far enough.

    While i do believe in 'a' minimum wage, the fact is that since its inception it has risen well above inflation almost every-time. On top of this, we had the recession and now a slow recovery.

    They should extend the 18-20 to 18-24 and on top of that cut all minimum wage rates back to the levels of October 2006 (raise the aprrentiship rate to £3).
    A pay freeze is essentially a pay cut already....there is such a thing called inflation.
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    (Original post by Rakas21)
    Why should the lawmakers of this country not be paid huge amounts? It sickens me when lefties condone a merit based pay structure but then whinge that parliament gets paid too much.

    As far as i am concerned, they deserve every bit of that money and infact more.
    The sickening part isn't the salaries of MPs(they make peanuts compared to leaders in industry), it is that they are landowners and thus are happy to target the middle class income instead of the land owners who have made housing unaffordable to much of the general population while convincing people that ever rising house prices are a good thing.
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    (Original post by Rakas21)
    Why should the lawmakers of this country not be paid huge amounts? It sickens me when lefties condone a merit based pay structure but then whinge that parliament gets paid too much.

    As far as i am concerned, they deserve every bit of that money and infact more.
    I agree with this
    In my view David Cameron gets paid very little for the amount of stress and hassle his job involves. I wouldn't want to be PM even if I was paid millions
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    (Original post by Classical Liberal)
    I agree. It just shows the in discriminant nature of their hatred and stupidity.

    One of the great ironies is these people condemn politicians for high wages (although compared to how much effort MPs put in and how skillful these people are, the wages are pittance) whilst at the same time complaining only rich people are in government.

    Well how do you expect people without a huge endowment of wealth to be MPs when the MPs are underpaid? How do you expect poorer folk from the North to be able to afford to have two homes and commute into London regularly?The very people these lefties want in power. And yet the lefties will sometimes invoke policies that lead to precisely the opposite consequences of what they desired. Standard.
    I'm going to play devil's advocate here. Is there not a risk that excessively high wages for MPs will attract people motivated by greed and self advancement rather than genuine concern for the good of society (if you don't believe in society, just define it as the aggregate of individuals for the sake of argument)? And the state, with its huge resources, could potentialy attract an overwhelming majority of talented individuals leading to a dearth of ability in the private sector, stifling entrepeneurship and undermining the efficiency of other institutions.
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    I can understand the logic of a lower or non existent NMW increasing employment, but I've got just one point to make that maybe you guys can answer.

    If there's lots of unemployed people going for a job they will be both young and old so under 21 and over 21 years of age. If businesses don't discriminate based on age like they legally shouldn't then surely it's not going to have much effect because the company still has a high chance of employing a 21+ year old who saw a NMW increase. Especially given the additional experience the 21+ year old would have over younger applicants.

    I've been looking at NMW and think it's too high myself so this is a welcome policy.
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    (Original post by JacobW)
    I'm going to play devil's advocate here. Is there not a risk that excessively high wages for MPs will attract people motivated by greed and self advancement rather than genuine concern for the good of society (if you don't believe in society, just define it as the aggregate of individuals for the sake of argument)? And the state, with its huge resources, could potentialy attract an overwhelming majority of talented individuals leading to a dearth of ability in the private sector, stifling entrepeneurship and undermining the efficiency of other institutions.
    True. But the wages are not excessively high. For the amount of work they do they are paid very little.

    And these people are talented and many of them could have gone into the private economy and get well paid there.

    I am not saying pay them equal to their private sector value, I am just saying they really are under paid.
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    (Original post by JacobW)
    Do you not realise that the reason MPs and ministers are paid good salaries is precisely to enable people of modest means to achieve office? No doubt most of the current lot could live of their investments and savings, but reduce the salary and you only make it even more difficult for poor or working class people to enter politics.
    Unfortunately, you didn't read my post in its context, and some subsequent posters didn't either, going by their comments.

    I am talking about extraordinary times and multi-millionaire cabinet ministers - not long-termism, nor politicians generally. Oh, one thing...how many cabinet ministers in the past have been from poor and working class backgrounds?

    In the intended context, your comments don't apply, although I am sympathetic to them ordinarily. However, when you have a government that keeps banging on about how 'we're all in this together' it rings very hollow, and hypocritically, considering their personal wealth and reluctance to effect policies that impact greatly on their own circumstances or those of their wealthy friends and benefactors.

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