Filed under: Tax
The benefits of an increase in the minimum wage is obvious for the individual but it also sticks the boot in to profit-hoarding companies.The government announced last week that the national minimum wage is to rise 12p an hour to £6.31 for adults and by 5p to £5.03 for 18 to 20 year olds. This very small boost will come in from October following recommendations from the Low Pay Commission.
It's a small victory for the lowest earners although it should not be forgotten that the rise actually represents the fourth straight annual fall in the real value of the minimum wage after inflation has been taken into account.
The 12p extra an hour may not seem like a big boost in a person's pocket and the minimum wage is still a long way off the living wage of £7.45 in the UK, and rising to £8.55 in London.
Where the 12p will make a difference is to the balance sheets of big businesses, which is why lots of business organisations believe that the market, not the government, should be left to determine wages.
Unfortunately for big businesses there isn't a lot of sympathy for them. Over the past year we have seen numerous stories about multi-million pound companies paying very little in tax - the most recent being the UK's biggest energy companies.
There are plenty of businesses out there that like to pay their workers rubbish wages but don't like to pay their fair share of tax who should see the increase in a minimum wage as karma.
The idea behind capitalism is that profits made by huge organisations eventually trickle down to the rest of us but when companies are hoarding their profits and avoiding tax they're preventing that money from making its way to the masses.
By increasing the minimum wage it is a way of reorganising wealth and giving workers their dues; essentially its making companies pay their dues to society.
Unfortunately there is still a long way to go when it comes to wages, aligning increases to inflation would be a beneficial first step and then moving towards a living wage as a target second step.
It's easy for those at the top who earns tens of thousands a pound a year to decide 12p a year is enough of an increase but if the government really wants people to be self-sufficient, save for their future, and no longer rely on benefits then it has to help them earn a wage that they can actually live on.