National Minimum Wage: What can you actually buy with your wages?

2012-10-03 01:05 PMComment

 

The National Minimum Wage (NMW) in the UK increased from £6.08 to £6.19 yesterday. The minimum wage for apprentices also increased by 5p from £2.60 to £2.65. The NMW for people aged 18-20, however, remained the same (£4.98); as did the minimum wage for 16-17 year olds (£3.68).

 

Following this announcement, I decided to find out what you can actually buy with an hour’s pay if you’re on National Minimum Wage. Prepare to be shocked, amazed and angered by the results of this ridiculous wild goose chase…

Apprenticeship Minimum Wage: What can you buy for £2.65?

If you’re an apprentice, earning £2.65 an hour, you may not be able to afford a ‘meal deal’ from Tesco (£3) after an hour of hard graft, but, according to The Sun, you will be able to afford the hair gel that Wayne Rooney used during Euro 2012; a male grooming product that, apparently, was the secret of England’s so-called ‘success’ during this year's European Football Championship. Unbelievable Jeff!

National Minimum Wage for 16-17 year olds: What you can buy for £3.68?

We actually struggled to find anything you can buy for £3.68 exactly. Back in 2011, you could have bought eight first class stamps, or you could have gorged yourself on 368 penny sweets in the early 90s; however, Royal Mail and extortionate 21^st century corner shop prices have unfortunately put an end to that.

 

Don’t fret, though! If you’re 16 or 17, on National Minimum Wage, and want to spend an hour’s wages in one fell swoop, you can buy four jars of horseradish sauce from Northern Butchers Supplies Ltd. Winner!

 

Alternatively, you could do something useful with your hard-earned pittance and pay for four struggling children to spend one day reading with a VRH volunteer. Kaboom!

National Minimum Wage for 18-20 year olds: What you can buy for £4.98?

Now we’re talking! Sure, you’ve still got less than a fiver to play with, and you’re going to miss out on all those wonderful things priced at £4.99. However, after a lot of digging around, we found a treasure chest of absolute gems which you can buy for four pounds and 98 pence exactly! Try these bad boys on for size:

 

- Half a spoon (I'm not even kidding);

- A carbon steel lopper (I also have no idea what this is);

- A sponge in the shape of a rocket lolly (bizarre);

- A hot lips trivet (why wouldn’t you want this?);

- A tent (not to be used in adverse weather conditions);

- A bag of roast potatoes with beef dripping (yum-core!).

National Minimum Wage for workers aged 21 and over: What you can buy for £6.19?

Once you’ve reached the ripe age of 21, and have started earning £6.19 an hour, you can finally bask in the warm embrace of modern technology. Indeed, with an hour’s worth of cash in your back pocket, you can purchase a Blu-ray of the classic Vietnam War film, Platoon or a 16GB USB stick. Excelsior!

 

Alternatively, if you’re feeling a pang of nostalgia for the 1980s, you could buy a charming Rubik’s Cube game. Huzzah!

 

***

 

Ok, I admit it: that was a slightly stupid exercise. After all, I didn’t even take income tax into account. My intention, however, was to highlight the notion that the current National Minimum Wage in the UK is inadequate.

 

Admittedly, our National Minimum Wage isn’t completely awful, but it isn’t great either. For instance, our National Minimum Wage pales in comparison to that of Australia, which is $7.55 (£4.85) for 16 year olds, $9.22 (£5.93) for 17 year olds, $10.90 (£7.01) for 18 year olds, $13.17 (£8.47) for 19 year olds, and $15.59 (£10.02) for people aged 20 and over.

 

I understand that the UK government calculates National Minimum Wage based on a variety of economic factors, and it perhaps wouldn’t make sense to increase National Minimum Wage in the UK to £10. However, the minimum wage for apprentices should, at the very least, be increased.

 

Quite frankly, £2.65 is preposterously low. You may argue that apprentices are being paid to receive a free vocational education, and thus shouldn’t be entitled to the same wage as other workers. However, most apprentices aren’t paid for the portion of their training which involves being in the classroom; they are only paid on an hourly basis for the on-the-job part of their apprenticeship. Essentially, they are being paid a very low hourly wage for a part-time job. How can apprentices afford to live on this amount, unless they continue to be supported by their parents?

 

The minimum wage for apprentices in Australia is actually higher than the minimum wage for non-apprentices. In the first year of their apprenticeship, an Australian apprentice is entitled to $10.22 (£6.57) an hour. The minimum wage for apprentices then increases each year until their fourth year, when they are entitled to $17.65 (£11.35) an hour.

 

It appears that apprentices are actually rewarded in Australia for undertaking a vocational training route. This is certainly something we should consider doing in the UK. The government has pledged, after all, to create more apprenticeships in the UK, but how will young people be encouraged to take advantage of these opportunities when they will undoubtedly be paid lower wages?

 

To be fair, many companies that employ apprentices pay their trainees much higher wages. However, the minimum wage for apprentices provides a conveniently low benchmark that many employers can take advantage of; making the most of incredibly cheap labour whilst still paying the legally required amount. Why would companies pay an apprentice more if they legally don’t have to?

 

This begs the question: should we even have a minimum wage at all? Many other European countries don’t actually have a minimum wage, including Germany, Austria, Switzerland, Denmark, Sweden, Norway and Finland; all of which are prosperous countries with strong economies.

 

On the surface, not having a minimum wage might seem a bit unfair, as employers could theoretically pay their employees next-to-nothing. However, this doesn’t actually happen in countries such as Germany, Sweden and Switzerland. The absence of a low wage benchmark means that companies are compelled to pay higher wages to attract workers.  The lack of minimum wage breeds competition. In turn, this means that people are paid higher wages and their quality of living improves as a result.

 

The fact that at least one city from each of these countries places higher than any UK city in the Mercer Quality of Living Survey 2011 tells its own story. Indeed, Vienna, Zurich, Munich, Dusseldorf, Frankfurt, Geneva, Bern, Copenhagen, Hamburg, Berlin, Stockholm, Nurnberg, Stuttgart, Oslo and Helsinki all feature in the top 35, whilst London sits in 38^th place.*

 

This survey result is not just a one off. Consistently, since 2005 Germany, Austria, Switzerland, Denmark, Sweden, Norway and Finland have performed better than the UK in quality of living surveys of this ilk. For instance, The Economist Intelligence Unit’s Quality-of-Life Index, 2005, which regards material well-being and job security as indicators of living quality, places the UK in 29^th place, with Switzerland 2^nd, Norway 3^rd, Sweden 5^th, Denmark 9^th, Finland 12^th, Austria 20^th and Germany 26^th.**

 

There appears to be a direct correlation between a country’s minimum wage, or lack thereof, and the quality of living. Indeed, Australia, with its high minimum wage, also has five cities that place higher than London in the Mercer Quality of Living Survey 2011: Sydney (11th), Melbourne (18^th), Canberra (26^th), Adelaide (30^th) and Brisbane (37^th). Likewise, according to The Economist Intelligence Unit’s Quality-of-Life Index, 2005, Australia is the 6^th most livable country in the world.

 

Perhaps, therefore, if we increased the National Minimum Wage in the UK, or got rid of it altogether, we could enhance our quality of living and provide the perfect platform for young people to thrive in their chosen careers.

 

 

* www.mercer.com/qualityoflivingpr#city-rankings

** www.economist.com/media/pdf/QUALITY_OF_LIFE.pdf

Image courtesy of Stephen Day, ‘Unhappy Deal’