I had a lengthy conversation yesterday with someone about the Living Wage. Now before I go any further I do think people should be paid enough to live on and a it is something we should be working towards.
The problem to me was a figure of £30,000 a year was quoted. Again, I can understand this but what I failed to get an answer on was “where is the money coming from?”.
This is the thing that never gets answered – an idea is useless without implementation. So I was accused of not believing in it just because I asked questions that couldn’t be weren’t answered.
Tesco announced profits of £1.6bn and this seemed to be the yardstick being used – in effect, Tesco can afford to pay all their staff a minimum of £30,000 a year so that should be the living wage.
The problem to me then was, so how do the local butcher pay that? The local greengrocer? Yes I know, there are very few of them these days but how would they survive if they had to pay a minimum wage of £30k a year? I can many closing or laying off staff.
Basic economics says a business needs to make a profit. To do this you need to cover your costs which include staff costs such as wages. Forcing a small business to pay £30k could well put them under – so increasing unemployment.
The alternative is to put prices up – but that potentially cancels out any increase in wages (yes, the inflation word).
I’m not Tesco’s biggest fan but I shop there when I have to – so I am partly to blame for their £1.6bn profits. How many others moaning about Tesco’s profits shop there and will still shop there?
I also realise they are a huge company (maybe too huge) so therefore their profits will be in proportion – in fact the £1.6bn works out at around £4,000 profit per employee in the UK alone (open to being corrected on this).
So yes, let’s work towards a Living Wage – but please, let’s not base it on what the UK’s largest private sector employer is making.