Friday, 27 September 2013

Why a forced living wage would hurt Brighton

by Lewis Jaffa.



As most of us know, Brighton has a lot of small, independent businesses dotted around. The area around North Street is a prime example of how businesses can thrive if they can manage to specialise enough to stand out from the rest. 

And as I’m sure all you wannabe hacks are aware, the Labour party is presently residing in our fair city for their annual party conference. I mention this because of the rather radical ideas that Ed Miliband has been putting forward to make himself seem as different from David Cameron as possible, much like the indie shops of Brighton.


While a lot has been said in the news recently of Ed’s plans to freeze the cost of energy, I’m more concerned about his decision to try to introduce a “living wage” of about £7.45 across most of the UK (it will be higher in London) and to “name and shame” those companies linked to the government who refuse to offer it.
Confederation of British Industry director-general John Cridland said the conference had delivered "a real setback for Labour's pro-enterprise credentials".
"Government is there to set minimum standards. You begin interfering with price, property and wages, as well as in tax, and you put business taxes up, how do you expect that to have a positive impact on wealth creation, job creation and more jobs on the high street?"
The living wage is significantly higher than the current minimum wage which is £6.19 per hour for those over 21. On the face of it, this seems like a masterstroke for the people in Britain who are earning the lower minimum wage.
However, there would be massive knock-on effects if this were to be implemented, especially in Brighton. Brighton’s main source of income is its tourism industry. Even during the recession, Brighton and Hove saw an 11% increase in overnight visitors between 2007 and 2011 – sending the number of tourists past the million mark.
As anyone, like myself, who has worked in a cafĂ©, shop or tourist attraction will tell you, it is rare to see anyone get paid more than the minimum rate. If a living wage were to be introduced, those small businesses that make up a massive part not only of Brighton’s economy but also its appeal will go bankrupt. 
It’s as simple as that.
Why? Because as you raise the expected wage for people in the minimum wage category, they will only apply or try to find jobs that pay that wage. The only businesses that will be able to afford the significant rise in the expected wages are the big kahunas. Tesco or McDonald's, for example.
Not only that, but those companies who try to implement the higher expected wages will be forced to employ less staff to make up for it. Another blow for the largest chunk of the unemployed.
Despite the news that Ed seems to have gone so far to the left he’s lost his mind, it is not all doom and gloom. The Brighton and Hove Chamber of Commerce has pledged not to “name and shame” businesses that do not pay the living wage in the city. It has so far signed up 93 firms to its campaign. This will go a long way to keeping those small businesses afloat.

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