The National Minimum Wage - Chapter 9
- Created by: sammilaw
- Created on: 29-03-16 10:39
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- The National Minimum Wage
- Chapter 9
- Strengths:
- Entry point for students to find a job - may go on to find higher paid work
- Teaches responsibility, discipline etc
- Benefits economy in the LR
- Firms cannot exploit their workers
- Especially monopsonists
- Distributes some of a firm's wealth to the people that produce it - inequalities reduced
- May lift people out of poverty
- Firms more careful in who they hire = higher productivity
- Employees may work harder with increase pay
- Entry point for students to find a job - may go on to find higher paid work
- Weaknesses:
- Increase in the firm's total costs
- Less workers hired
- Increased prices for goods
- Does not help those who do not have a job or are illegally employed
- Those with higher wages than the NMW will want pay increases to maintain differentials
- NMW = inflationary
- Those that get tips i.e. waiting staff may receive less = income not increased
- Ineffective if set below market wage rates
- Abolishing the NMW allows the firm to structure their company in a way that suits theirneeds
- Risk of firm's outsourcing labour to foreign countries
- Or workers substituted for machinery
- Some firms may struggle to cover NMW costs i.e. non profitable charities
- Increase in the firm's total costs
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