Comprehensive Report: Minimum Wage Impact on UK Economy

This report provides a detailed analysis of the minimum wage in the United Kingdom, exploring its significance, benefits, and drawbacks. It begins by defining the minimum wage and its legal implications, emphasizing its role in increasing wages and reducing poverty levels. The report discusse...Read More

Minimum Wage in
UK
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Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Importance of minimum wage................................................................................................3
Minimum wage Act................................................................................................................4
Benefits and drawbacks..........................................................................................................4
Significance of minimum wage in United Kingdom..............................................................5
Conclusion.......................................................................................................................................7
REFERENCES................................................................................................................................9
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INTRODUCTION
Minimum wage is defined as lowest wage rate per hour, which an individual is paid as
mandated by the federal law. In addition to this, it is a legally mandated price on hourly basis and
below is non-exempt by workers. The minimum amount is paid to the employer that is necessary
to pay wage earners in order to the work performed by them during a time period Aitken, A.,
Dolton, P. and (Andreyeva and Ukert, 2018). The report covers the minimum wage in United
Kingdom. In addition to this, the importance of minimum wage is discuss in the report along
with the importance of minimum wage to government, multinational companies and individuals.
Moreover, the benefits and drawbacks of minimum wage is described in the report.
MAIN BODY
Minimum wage is also known as living wage, it is the smallest amount of money that
employers and companies are legally allow to pay to the workers performing for them. It is
important for employers to give the amount that is mandate by the federal law and if not it is
legally unethical and the government has the right to take action on it.
Importance of minimum wage
Minimum wage is essential because it increase wages and decline the poverty level. It is
essential to protect the labours from exploitation of employment practices. The federal
government proposed the minimum wage act with an aim to provide right salary to workers of
their efforts. By the assistance of this, the workers especially in UK is able to fulfil their needs
and live their life properly. In addition to this, in United Kingdom the wages given to workers is
according to the hour basis and it is also based on the age of the labour (Riley, 2019). It is
determine that if a company is not provide wages as per the minimum wages it is unethical and
penalty is charge by the government. One of the most significant factor that is associated with
the minimum wages is it decline the poverty level from the country due to which the economy is
stable. Moreover, minimum wage act is important to follow as it create employment and decline
the level of unemployment rate due to which inflation rate increase that has a positive influence
on the productivity and profitability of multinational companies. The minimum wage help
certain families to earn more and meet their requirements as it is determine that people or women
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working in United Kingdom is mainly parenthood and work for to fulfil the needs of their
family. The minimum wage has high influence on the economy due to which a country gain
growth and development as well.
Minimum wage Act
The minimum wage act was first established as well as introduced in New
Zealand and Australia with an attempt to increase the income of unskilled labour. In addition to
this, most modern developed economies and underdeveloped economies is enforce a minimum
wage exception involve Norway, Switzerland, Denmark, Singapore and many more (Ponce,
2018). In the present, the minimum wage rate in US is $7.28 per hour, which directly mean that
it is illegal for employees to pay less than amout to the workers. This act is established with an
aim to provide the right wages to the workers so that they can fulfil their basic needs.
Benefits and drawbacks
Benefits:
 It help in declining tax burden: The unemployed people were give rent assistance, welfare
and food stamps that lower down the requirement for public assistance. It will decline the
tax burden on the state as well as communities.
 It aid certain families: It is determine that the number of wage earners in the United
Kingdom are mainly working parents who is raising a family (Brosnan, 2019). Thus, it is
beneficial for those families to who impose to work for less money.
 It serve as an incentive for employment: The minimum wage will give the unemployed
an incentive to grab a job opportunity. They have an opportunity to compare money,
which they get from public assistance to minimum wages in order to determine perks of
taking the job.
Drawbacks It disrupt economic system: Considering the demand & supply that is where the economy
is at equilibrium, wage function is similar to a price floor. A higher wage level disrupt the
price mechanism that mean the market is not clear and able to find work. All this will
result as non-price competition, worker’s personal connection, price competition that
make difficult for younger and unskilled individuals to find work. It means a minimum
wage policy have negative impact which can cause to damage of market of labour.
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 It can develop unemployment: In the labour market, pay rates impact on the capability of
employers to recruit them & capability of workers to work. The legislated raise in labour
costs do not enhance productivity of workers. In addition to this, some workers might
lose their job and mainly the one who are less productive in order to perform work
properly.
Significance of minimum wage in United Kingdom
Minimum wage for a country is quite essential as it assist in enhancing the wages as well
as reduces poverty from the country. Along with this, another significance is that it help in
protecting workers from exploitation within the workplace. By the labor government, first
national Minimum Wage introduced in the year1998 for protecting their rights. It has been
analysed that UK minimum wage mainly based on the wages given per hour which is
implemented to every type of jobs within the marketplace of UK (Begley, 2019). Furthermore,
UK government analyze the wages on an annual basis in the month of April. This is done by
them once they take advice from Low Pay Commission which is an independent body. It is also
said that all the employers within UK is required to give at least minimum wages to their
employees who are of 25 years. Along with this, the total amount received by the workers
highly based on the age bracket they fall into. It has been decided by the government of UK that
they fix specific wage rate according to the age group. The table mentioned below includes the
amount along with the age group provided by the UK government.
Age Uk min wages per hour Min wages from April 2019
25 and older 7.83 8.21
21-24 years 7.38 7.70
18-20 5.90 6.15
Under 18 4.20 4.35
Apprentice 3.70 3.90
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With the help of above stated table, it has been concluded that government of review
minimum wage on an annual basis as it is depend on the employees age and their work. At
present, workers who are of more than 25 year age group get £8.21 which is implemented in the
year 2019. Apart from this, it has also been observed that minimum wage provides ample
number of advantages and benefits to the country, government, multi national organization and
the individuals living within UK. By implementing such methods, it can be said that the overall
economics system of the country will be improved as poverty from the socNational minimum
wage are quite significant for some sectors which are going to be discussed as follows in detail:
 For government: Government or legal bodies of a country are authorized for developing
and implementing acts which need to be followed by each and every person living within
the country. In reference to the minimum wage act the main or long-term aim behind
implementing this is to reduce the issue of poverty pay, which arise at the time of earning
received from the paid work is not getting according to the requirements in order to spend
their livelihood. Benefit for the government by executing such policies and strategies is
that large number of people will be able to show their interests (Greco, 2018). Along with
this, it has also been said that government uses this method for eliminating poverty from
the country and increases their overall economic system in a positive manner. Therefore,
it has concluded that government of UK get various benefits by adopting minimum wage
act within the marketplace as it creates positive relationship with the individuals,
organizations as well as with other countries.
 For individual: In order to live and fulfill all the basic requirements, it is quite essential
for a person to earn a specific amount. It has also been said that by implementing
minimum wage act by different organizations which is formulated by the government of
UK, poverty within the country might be reduced as people who get low
payment received more income as well as those who are unemployed will be
motivated to work in the labor market (Šauer, 2018). Another significance gained
by individuals after executing minimum wage act is that it encourages people to work as
the exploitation might get reduced. Over the period of time, it has been identified that
minimum wages act assist lower income families in order to live their life and fulfill all
the requirements.
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 For multinational corporations: In reference to multinational business entity, it has
been said that minimum wages act plays very essential role. Such organization with in the
marketplace of UK, has been identified that the influence of National Minimum Wage
(NMW) was has been reviewed extensively with the help of Low Pay Commission
(LPC). It has also been identified that with the help of adopting minimum wage act by
each and every multinational corporations within the market of UK, they will be able to
attract large number of people towards the organization. This leads towards the growth
and success of a business entity at the competitive marketplace and also assist in
enhancing the living standards of individuals (Leung, 2018). Apart from this, by doing so
an organization can easily create positive working environment within the organization.
For example, Tesco is a multinational organization mainly deals in variety of products
and services across the whole wide world. In reference to the marketplace of UK, the law
formulated by the government of the country is adopted and implemented by the higher
authorities of the organization. This will assist in producing positive brand image of the
business entity along with the improvement of living standard. Furthermore, minimum
wages act help in reducing poverty from the country which as a result contributes its
share in the economic development of the country.
 With the assistance of above stated report, it has been concluded that minimum
wage provides help to the country in order to enhance their economy as well as living
standards of the people . Apart from this, by implementing minimum wage act within the
marketplace of UK, individuals get right amount of money which helps them in fulfilling
all their basic needs and requirements so that they can easily spend their living beings.
Conclusion
From the above discussion, it has been concluded that minimum wage is the least amount
that is given by employer to the workers. It is essential for employers to pay the amount o the
workers according to the law made by federal laws. In addition to this, the importance of
minimum wage is different for companies, government and individuals as well. In addition to
this, the wages in United Kingdom provided to the workers according to their age and on hourly
basis.
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REFERENCES
Aitken, A., Dolton, P. and Riley, R., 2019. The Impact of the Introduction of the National Living
Wage on Employment, Hours and Wages (No. 501). National Institute of Economic and
Social Research.
Andreyeva, E. and Ukert, B., 2018. The impact of the minimum wage on health. International
journal of health economics and management, 18(4), pp.337-375.
Begley, P., and et. al., 2019. Evidence-informed or value-based? exploring the scrutiny of
legislation in the UK Parliament. The Journal of Legislative Studies, 25(1), pp.1-20.
Brosnan, P., 2019. The minimum wage in a global context. In The Handbook of Globalisation,
Third Edition. Edward Elgar Publishing.
Greco, L., 2018. Industrial Redundancies: A Comparative Analysis of the Chemical and Clothing
Industries in the UK and Italy: A Comparative Analysis of the Chemical and Clothing
Industries in the UK and Italy. Routledge.
Heery, E., Hann, D. and Nash, D., 2018. Trade unions and the real Living Wage: survey
evidence from the UK. Industrial Relations Journal, 49(4), pp.319-335.
Leung, J., 2018. Minimum wage and real wage inequality: Evidence from pass-through to retail
prices. Available at SSRN 2786411.
Ponce, N., and et. al., 2018. The association of minimum wage change on child nutritional status
in LMICs: a quasi-experimental multi-country study. Global public health, 13(9),
pp.1307-1321.
Šauer, R., 2018. The macroeconomics of the minimum wage. Journal of Macroeconomics, 56,
pp.89-112.
Tupa, M. and VOJTOVIČ, S., 2018. IMPACT OF BREXIT ON THE MIGRATION IN THE
UK. Ad Alta: Journal of Interdisciplinary Research, 8(2).
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