Its the labour party for me.

[Andy1976]

I do acknowledge the basic premise, of course I do, I see it whenever wages go up...

 

But let's consider an example here of a factory worker. I'll keep the numbers simple to make the point.

 

Worker earns £5 an hour. This gets increased to £5.50 a 10% rise

Worker makes 10 widgets per hour. Labour costs prior to change 50p per widget, after wage rise 55p. 10% change

Materials costs of widget before rise £5, after rise still £5

Total cost of widget before rise £5.50, after rise £5.55 so a 1% increase

 

So in this example, the price of goods goes up by 1% whilst wages go up by 10% because the price of the materials doesn't rise directly in line with the costs of staffing, nor does the cost of renting of premises or mortgage payments. Yes my example was massively oversimplified, I've not taken into account costs of staff not DIRECTLY involved in the manufacture or the idea that material costs could rise too if the materials come from companies who have also had to increase staff costs, but as we live in a global world, lots of our suppliers are overseas so unaffected by our wage levels.

 

If increasing wages didn't make an difference to the buying power of workers then we'd see people in developing countries having as much 'stuff' as we do because their costs would be low so the items would be low. It doesn't, so the argument doesn't work the other way either.

 

Use a non-material example and see the risks.

 

In law, we work on fixed fees. Using a straight example, for a road traffic accident claim, the solicitor is paid £500, regardless of the duration of the claim. That won't increase, at all.

 

Said law firm, and let's use Irwins as an example as they have a lot of unqualified staff, employ a team of 10, being 3 Solicitors on £40k, and 7 paralegals on £17k. (Both are realistic amounts, or generous in fact).

 

Said law firm before the rise in NMW copes ok.

 

However after the rise, those 7 paralegals are increased to £20k. They have to find 7 x £3k increases, so £21k a year extra.

 

They can't increase their fees, as they're fixed. They have two choices. Either remove the actual qualified staff, or get rid of a few people and have those remaining doing more work. Both solutions reduce the quality of the work in my view. There are no alternatives.

 

This is the situation my industry faces at the moment. It affects all firms - big firms will have to increase wages on huge numbers of staff, and small firms don't have other departments to swallow the loss for them.

[truman]

I do acknowledge the basic premise, of course I do, I see it whenever wages go up...

 

But let's consider an example here of a factory worker. I'll keep the numbers simple to make the point.

 

Worker earns £5 an hour. This gets increased to £5.50 a 10% rise

Worker makes 10 widgets per hour. Labour costs prior to change 50p per widget, after wage rise 55p. 10% change

Materials costs of widget before rise £5, after rise still £5

Total cost of widget before rise £5.50, after rise £5.55 so a 1% increase

 

So in this example, the price of goods goes up by 1% whilst wages go up by 10% because the price of the materials doesn't rise directly in line with the costs of staffing, nor does the cost of renting of premises or mortgage payments. Yes my example was massively oversimplified, I've not taken into account costs of staff not DIRECTLY involved in the manufacture or the idea that material costs could rise too if the materials come from companies who have also had to increase staff costs, but as we live in a global world, lots of our suppliers are overseas so unaffected by our wage levels.

 

If increasing wages didn't make an difference to the buying power of workers then we'd see people in developing countries having as much 'stuff' as we do because their costs would be low so the items would be low. It doesn't, so the argument doesn't work the other way either.

 

Look at it this way then...labour now costs 10% more in the UK to manufacture a widget..companies abroad have lower wage costs,at what point do I decide to get my widgets manufactured abroad.?

[mossdog]

It certainly worries me if she became Home Secretary. That and she's too "close" with Corbyn.

.........heard a rumor that "Tony" is to follow Macron and launch a new party to include Boris and Dianne...........called the "Liability Alliance Party"

[dutch]

Makes you wonder at the mindset of some who would vote for this to be in charge of the country,

"EXPOSED: Pictures that prove Jeremy Corbyn addressed a rally attended by EXTREMISTS from a banned terror group linked to the London Bridge atrocity"

http://www.dailymail.co.uk/news/article-4577354/Jeremy-Corbyn-addressed-rally-attended-al-Muhajiroun.html

 

Daily mail thinks they are smart. The only group this works on are old stuck dump elderly people who still believe in newspapers.

 

JC is driven by a force of multimedia that recognises daily mail for what it is and it will increase support for JC just like it did when he became party leader.

[sgtkate]

Use a non-material example and see the risks.

 

In law, we work on fixed fees. Using a straight example, for a road traffic accident claim, the solicitor is paid £500, regardless of the duration of the claim. That won't increase, at all.

 

Said law firm, and let's use Irwins as an example as they have a lot of unqualified staff, employ a team of 10, being 3 Solicitors on £40k, and 7 paralegals on £17k. (Both are realistic amounts, or generous in fact).

 

Said law firm before the rise in NMW copes ok.

 

However after the rise, those 7 paralegals are increased to £20k. They have to find 7 x £3k increases, so £21k a year extra.

 

They can't increase their fees, as they're fixed. They have two choices. Either remove the actual qualified staff, or get rid of a few people and have those remaining doing more work. Both solutions reduce the quality of the work in my view. There are no alternatives.

 

This is the situation my industry faces at the moment. It affects all firms - big firms will have to increase wages on huge numbers of staff, and small firms don't have other departments to swallow the loss for them.

 

Why can't you increase your fees? Is the amount set by the government? If it's set by you guys, is the only reason you can't increase it because your competitors won't therefore you'll be too expensive? If that's the case then how are your competitors coping without increasing their fees? If the fee is set by the government then surely that should increase inline with the legal firms reasonable costs, so £500 fee should be increased to say £550.

[mossdog]

Daily mail thinks they are smart. The only group this works on are old stuck dump elderly people who still believe in newspapers.

 

JC is driven by a force of multimedia that recognises daily mail for what it is and it will increase support for JC just like it did when he became party leader.

...........the "Mail" does wind some young twerps up as well!

[sgtkate]

Look at it this way then...labour now costs 10% more in the UK to manufacture a widget..companies abroad have lower wage costs,at what point do I decide to get my widgets manufactured abroad.?

 

But labour costs are already massively lower so if that's your sole reason then why aren't you manufacturing overseas already? I doubt I can find a single item of clothing in my wardrobe that's made in the UK. And it is definitely about finding the happy medium but currently minimum wage is so low relatively that people earning it have to get their wages topped up by tax credits so clearly something is wrong here. If we are saying that minimum wage isn't enough to earn a reasonable lifestyle then either the costs of living here need to decrease or the amount of money earned has to increase. For most people the costs of living would be helped massively by cheaper housing, so we need to reduce housing costs, probably by building more a lot more, but people don't want that as it will reduce the value of their house. So we increase wages so the businesses are forced to pay their staff enough money so people aren't getting government handouts when they are working full time on NMW. But then people complain that businesses may go bust or have to cut staff to cover the costs. So we do nothing and carry on paying out billions a years in benefit payments to people working full time, and then people complain our welfare bill is too high....and around we go.

 

So, over to you. How do we break out of that loop while not buggering up people's mortgages, shutting businesses or making people unemployed and reducing the welfare bill?

 

---------- Post added 07-06-2017 at 11:16 ----------

 

.........heard a rumor that "Tony" is to follow Macron and launch a new party to include Boris and Dianne...........called the "Liability Alliance Party"

 

Made me chortle. I'd vote for them. Oh hang on.

[L00b]

Worker earns £5 an hour. This gets increased to £5.50 a 10% rise

Worker makes 10 widgets per hour. Labour costs prior to change 50p per widget, after wage rise 55p. 10% change

Materials costs of widget before rise £5, after rise still £5

Total cost of widget before rise £5.50, after rise £5.55 so a 1% increase

Now, factor in a FOREX down on its ar5e by 20% (you know, just like GBP did in the past 10 months ), i.e. materials costs of widget before rise £5, after FOREX drop £6.

 

Total cost of widget before rise £5.50, after rise and FOREX drop £6.55.

 

Before rise, worker on £5/h needed to work 1h 6mins to buy a £5.50 widget.

 

After rise, worker on £5.50/h needs to work 1h 12 mins to buy a £6.55 widget.

 

Dangerous things, simple examples/assumptions are

[dutch]

...........the "Mail" does wind some young twerps up as well!

 

You are talking about the ones who are trained by their parents who have lots of money to give them whatever they want.

 

There will be more people angered about this childish old fashioned hopelessly out of date attempt to desperately stop his momentum.

They tried to do that before when he ran for party leader and it only made more people come to support him.

[Andy1976]

Why can't you increase your fees? Is the amount set by the government? If it's set by you guys, is the only reason you can't increase it because your competitors won't therefore you'll be too expensive? If that's the case then how are your competitors coping without increasing their fees? If the fee is set by the government then surely that should increase inline with the legal firms reasonable costs, so £500 fee should be increased to say £550.

 

It's set by the Government at £500. We would love it to increase, but sadly the Government think that two years' work is worth £500 and won't budge on that.