Management Report: Tesco and the Implementation of Minimum Wages

This management report assesses Tesco's application of minimum and living wages, examining the aims, benefits, and costs associated with these policies. It highlights the legal regulations Tesco must follow in the UK, including the Minimum Wages Act and discrimination laws. The report discusses the potential benefits for Tesco, such as higher employee satisfaction and retention, as well as the costs, including business restrictions and potential financial strain. Suggested recommendations focus on adhering to government regulations and establishing a balanced approach to setting minimum wages to avoid legal issues and maintain business sustainability. The report concludes that adhering to minimum and living wage laws is crucial for retaining employees, improving productivity, and avoiding legal repercussions.

Management Report on
the minimum wage and
‘living’ wage

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
Minimum wages and living wages..............................................................................................1
Aim of the Minimum and living wages......................................................................................1
Benefits for minimum and living wages for Tesco:....................................................................1
Cost of minimum living wages for Tesco:..................................................................................2
Suggested recommendations.......................................................................................................2
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................4

INTRODUCTION
Minimum wages can be defined as minimum amount of wages that a employer must pay
to workers fro the work they performed during a specific time period which can not be reduced
in any case. Living wages refers to a income level of individuals that allow them to fulfils food
and shelter needs of their families. The chosen company for assessment is Tesco a multinational
retailing brand headquartered in UK. The serving area of the company includes more than 14
countries including Asia, America and Europe. The report covers how does Tesco apply the
minimum and living wages, aim of the company. In the next part it covers cost and benefits for
the company in dealing with this issue as well as the suggested recommendations for the
issue(Bell and Machin, 2018).
MAIN BODY
Minimum wages and living wages
Minimum wages is the law to protect worker's right against remuneration system of the
organisation. It helps in ensuring a just and equitable remuneration to all employees who needs
such protection. Minimum living wages can be a useful element to overcome from the poverty
also can reduce the inequality between men and women in organisation. Living wages provide a
mean to the employees and their families so that they can maintain a standard of living and
afford basic amenities such as food, shelter, health care and education.
Aim of the Minimum and living wages
The main of the making minimum and living wages law is:
 To ensure that employees can have the basic wages to fulfils their basic physical and
social needs.
 To secure enough living wages for all employees so that employees can provide food and
shelter facilities to their families.
 To ensure a better living standard of the employees. (Belser and et. al., 2020)
Legal regulations follows by Tesco
A business is not only influenced by the internal factors but also need to considers what is
going on outside of the company. The businesses has to work according to the external factor.
There are many government policies and laws that regulate the business behaviour and same
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goes for Tesco company. The company also needs to follow rules and laws decided by the
government of the UK:
 Government has provided the infrastructure to the Tesco to expand their
businesses by providing communication tools such as broadband devises. It also
removed the waste from streets which reduced the business cost and increased
demand in that particular area.
 Government of UK implement the minimum wages act in Tesco as the company
was accused of paying lower wages to their employees. After the minimum wages
regulation and laws imposed by UK government Tesco implemented these laws in
their company.
 Discrimination law is the another regulations imposed by the government for
protecting the rights of the employees to remove any discrimination on the basis
of age and gender.
Benefits for minimum and living wages for Tesco:
If the company apply the same law it can provide the following benefits to the company:
 Higher satisfaction: If Tesco allows the minimum wages law and implement it
effectively can improve productivity of their business. If they provides higher wages to
employees it will increase employees satisfaction and they will work with more
efficiency that will ultimately enhance the productivity(Dube, 2019).
 Retention of employees: Providing higher wages will motivate the workers to keep
working in the company for a long time. Tesco need to pay minimum living wages to
their workers to maintain their motivation level. If employees are highly motivated it will
help the company in retaining talented employees.
 Lower conflicts: Tesco can minimize the conflicts and disputes in company by raising
the wage level of employees also will reduce the wage differentiation and inequality.
There will be less disputes or conflicts between employees or between employees and
employers.
Cost of minimum living wages for Tesco:
 Restrictions for business: One disadvantage for the company to apply the minimum
wages is that it restrict companies about their wages level. After the application of
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minimum wages Tesco is no longer free to decides the wages according to the market
force they need to pay high wages to all workers regardless of their performance.
 Financial crisis: Because of minimum wages company faces problems and difficulties in
situations like financial crisis. During this time company may lower the wages to sustain
in industry but it might not be possible if there is minimum wages law applies in
company.
 Bad reputation: If company do not applies the minimum wages law employees can
strike and it will impact badly reputation of the company. As Tesco face legal acquisition
for not paying enough to its employees. Government of the country company is operating
in temporarily suspended the firm for restarting their businesses(Lesica, 2018).
Suggested recommendations for handling issues related to minimum wages
To avoid all legal actions and future crisis regarding the minimum wages payments it is
necessary for Tesco to follow rule regarding the wages and compensation laid down by the
government of the country. Setting and adjusting the minimum wages is most difficult process in
business because if it is set too low it will not have any impact for protecting worker's rights and it set
too high it will add the cost to the company. Thus a balanced approach for setting the minimum wages
is essential for protecting the worker's right and for sustaining the business in the industry. As the
Tesco faced equal pay disputes and debates regarding minimum wages it need to have a systematic
and balanced approach for minimum wages to avoid legal problems like this.
CONCLUSION
From the above assessment it can be concluded that minimum and living wages are the
policies that is laid down by government regulations and laws to protect workers right also a duty
of a employer's. Companies needs to apply the minimum wages law for retaining their
employees and improving productivity of the company. From the report it can be concluded that
if company do not follow minimum and living wages law and gives the less wages to their
employees it can face legal action from employees(Wong, 2019).
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REFERENCES
Books and Journals
Bell, B. and Machin, S., 2018. Minimum wages and firm value. Journal of Labor
Economics. 36(1), pp.159-195.
Belser, P., Francis, D., Jurgensen, K. and Valodia, I., 2020. Minimum wages: Tackling labour
market inequality. In Inequality studies from the Global South (pp. 205-220). Routledge.
Dube, A., 2019. Minimum wages and the distribution of family incomes. American Economic
Journal: Applied Economics. 11(4), pp.268-304.
Lesica, J., 2018. Lobbying for Minimum Wages. Economic Inquiry. 56(4), pp.2027-2057.
Wong, S.A., 2019. Minimum wage impacts on wages and hours worked of low-income workers
in Ecuador. World Development. 116, pp.77-99.
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