Wednesday, Jul 25, 2007
Min wage goes up in London drops for rest of UK
BBC: Minimum wage to be reduced
The minimum wage is set at £5.35 across the UK, however, if the plans go ahead it will be reduced in NI, Scotland, Wales and the north east of England.
THIS WILL LEAD TO BIGGER PRICE DIFFERENCES BETWEEN LONDON AND THE REST OF THE UK
Posted by david20040_0 @ 01:39 PM (215 views) Add Comment
36 Comments
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1. david20040_0 said...
If the minimum wage goes up in London and drops for the rest of the UK surely this will make the North - South divide get bigger and trigger another boom in house prices.
2. waitingfor hpc said...
yeah right david200040_0
what planet are you on? yeah i can see loads of people on 5.35 / 5.50 per hour waiting all night to buy that nice 2 bed flat for £250,000!!!!
5.50 x 37.5 x 52 = £10,725 - real house buying people at 25x salary!!
point here is that the minimum wage has pushed jobs / companies overseas, and is stopping low paid jobs being created. A skilled man in Poland earns £2 per hour. I know this as i have moved many of my jobs overseas. And i will not be coming back because Crash Gordon lowers the minimum wage by 10p!
3. confused76 said...
Are you totally deluded, or are you joking? Probably the latter, ahahahahh.... David, this was a good one, ahahhah
Minimum wages are NOT going up in London, and people on minimum wage generally do not live in Chelsea and commute.
Now, the train fares are going up way above RPI
http://www.timesonline.co.uk/tol/news/uk/article2134298.ece
So less funds to line the pockets of landlords in Slough, St Albans, Watford, etc.
"another boom in house prices."... where did you get this from, since when the "baristas" at Caffe Nero are responsible for the housing boom... it is the sick minds of the BTLers that are responsible
4. paul said...
Oh dear Gordon. Like many blue-sky thinking ideas it probably looked really great on paper - an examination of regional inflation pressures points to high in the south low in the north east. So lower wages in the North East, right? Wrong.
If he hadn't gone from "pruddant Scoht" thinking to "Oach aye, a wee dram n'a shot ay scag, areet!?" spending then maybe the purse strings would be so tight. Still I'm sure a few "poonds" could be shed closer to home eh Crash Gordy? eh?
5. david20040_0 said...
If the minimum wage in London increases to nearly £7 while in the North it drops to £4.50 this will obviously increase prices in London as the effect ripples upwards causing wage inflation in London thereby pushing up prices.
6. denzil said...
David I don't disagree with you because I don't know what you mean.
Can you expand?
If the minimum wage drops for the UK excl London how does that fuel another property boom?
People have less money, less money for rent and mortgage.
7. david20040_0 said...
Except in London, if min wage is 5.35 but rises to 7 in London that will cause wage inflation all round in London pushing up prices.
8. denzil said...
David,
your comments are surely a wind-up, no?
People in London on £7 a hour are hardly going to add to the property boom are they? I don't really imagine the rows of EA's rubbing their hands together in complete glee at this news.
9. david20040_0 said...
It will lead to a domino effect, the people on 5.35 now will go to 7, the people on 7 will go to 10 and so on leading to higher prices.
10. Whatplanetisdavidon said...
david20040_0
How can anyone on seven pounds an hour afford a mortgage in London?
Are you completely deluded?
11. Whatplanetisdavidon said...
"the people on 7 will go to 10"
How did you work that one out? If I run a company paying say £8 an hour to someone, why would the rise in the minimum wage to £7 change what I pay my employee?
You've answered my question about whether you are delusional or not.
12. mrmickey said...
No hang on this isn't as mad as it sounds. Outside of London the country is pretty well economically stagnant anyway so if you drop the minimum wage this will force more people on to benefits creating a nice big base of Nu Labour voters.
13. david20040_0 said...
OK, maybe I am wrong. I just thought it was weird, drop min wage for everywhere BUT London, it is like government sanctioned London weighting.
I just thought that if the people on minimum wage go from 5.35 to 7, then the people who were previously earning 7 would demand 8 and it would go up in tandem and then that would filter through and cuase prices to rise.
I just thought it was a bit odd that's all.
Especially as a Labour govt is supposed to help lower paid workers not hit them.
Then again I lean towards the tories so I am probably a bit biased.
But yeh I just thought if min wage goes to 7 in London it would just force a domino effect of price rises in London.
If you guys think I am deluded then yeh you guys are probably right.
14. denzil said...
David,
I don't think it is completely nuts that there will be some small domino effect but it will soon peter out while before it bubbles up through to anybody that can afford property.
Regardless of that I find it quite staggering that any government would consider cutting the minimum wage. It hardly an incentive to the poorest members of society. I'm not sure if Labour possess any values these days.
15. Paulos said...
I think David has a point about the ripple effect, but I think denzil is right that it will not spread very far.
My first thought is how this will affect the London job market - will low skill jobs be moved out of the city and redistributed to 'cheaper' parts of the country? If that happened it may actually help to balance out some of the imbalances around the country. How much it would work though will depend on where the line is drawn - will work remain in the south east or move elsewhere?
16. Countdown2007 said...
Well, how about a lot of migrant workers and others deciding once they earn less and the standard of living becoming more and more expensive they will return home or spread their wings to other countries?
That could mean lots of BTL properties will not get those tenants anymore, start selling up, flooding the market and pushing down the house prices that way? Or am I getting a bit carried away here?
17. Scott said...
A country in debt, people can now be held without charge, wages are dropping, asset prices rising, people living in sheds whilst others are in luxury. Soviet Russia ring any bells anyone?
18. david20040_0 said...
I agree Denzil, I just find it really odd that the Government is going to cut the minimum wage.
I mean surely aren't they going to lose votes with their own supporters by doing this. To me it just seems illogical.
I understand what you guys mean saying that people on minimum wage are going to be unable to afford property and I completely agree.
I was just trying to highlight the argument that if the minimum wage goes up in London if everyone's wage goes up in tandem then that will lead to more money being available and possibly an increase in house price growth in the capital.
19. Ah-so said...
Well it was have not effect on house prices. It also shows that "minimum wages" are mostly a bit of socialist fantasy - in reality the market sets the wages and minimum wages follow. What they do do is protect a very few from outright exploitation, but you would be hard pushed to find any jobs in London paying the minimum wage, while in Northern Ireland it has probably caused some unemployment.
20. Andy said...
Will it make any difference?
If minimum wage goes up to pay for the low earners it will be just taken out of the paypackets of the higher earners.
When mini mum wage was introduced it was the start of the equalisation of society - where everybody is reduced to the same level. But like every other Liberal doctrine it supports the weak and shackles the strong - so theres no point in trying to excel and progress cause the libs will bring you back to the cuban style regime of hopelessness.
21. I Like My Credit With A Lot More Crunch. . said...
It's simple really Crash Gordon want's to keep wages down for all those people that pick strawberries and cabbages, in order to keep food inflation down. Most of these people won't be voting for him soon because they can't unless Poles, Lithuanians etc. can suddenly get the vote. It'll make no difference to any British workers, they'll get more handouts.....sorry I mean tax credits.
The writing is on the wall for Brown's economic miricle, he knows it and we know it, but he thinks we don't. Expect loads more stupid initiatives in the next few months.
22. confused76 said...
"...everyone's wage goes up in tandem"
David,
Things do not go in tandem in London, .... recall the private equity guy who said he pays lower tax rate than the cleaning person.
City salaries, pumped up by revenue-based bonuses, are in fact quite volatile. After a couple of good years you have a downturn.
Trust me, I have survived a couple of these bubbles.
23. Bottledtolet said...
David has a point here. If all the cafes and restaurants in London suddenly have to start paying their waiters and cleaners £7/h then prices will inevitably go up, causing substantial local inflation. This will put pressure on other employers in better-paying sectors to increase the wages of their staff in London in order to prevent them finding work outside of London. Essentially it will exacerbate the whole 'London Weighting' effect, which we all know benefits the swolen London-based civil service immensely.
24. confused76 said...
Folks,
I have picked up this comment by a BTLer at the following Times article
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2136661.ece
He is getting, deservedly, angry responses by readers. I have posted one that will sure be censored.
"I am a BTL investor, owning 5 flats in London, and I want to ask these lenders why they did not warn us before about a market slow down.
We buy-to-letters need 10% capital appreciation per year in order to cover our growing mortgage costs because of the higher interest rates. What is wrong with the Bank of England, why have we become targets?
They should know that if we decide to liquidate our portfolios the whole UK economy will suffer.
Joe Hassam, Finchley, "
25. Boarder said...
The "minimum wage" is a con. It should be called the compulsory unemployment level. If your productivity falls below the "minimum wage" then you cannot legally be employed.
26. enuii said...
Political tripe if ever I heard it, this is typical NeoLabour warming up the plebs for something else at a later date. Tell them something bad like your wages are going down then they won't complain when the don't go up. This is a warm up exercise for the pre budget statement this autumn, they know inflation hits the lowest paid first so by getting a sound-bite statement like this out first they will minimise the complaints when the lowest paid do not get a wage rise. Looks like Gordon is slipping back into his old ways of spin and it just goes to prove that the old leopard cannot change his spots.
27. mrmickey said...
enuii I think this was how Stalin ran Russia keep the workers under the jack boot but from time to time give them the odd tit bit and they'll lick your hand like a faithfull dog very cynical.
28. tipping point said...
Ah the good old them and us mentality. Treate areas differently and they will change accordingly. I predict the following conversation between parent and child in the North East in the not so distant future:
"Listen here my child, when you leave school you're going to have to move down south, find a job, and send money home to your parents. The minimum wage down there is double what you could earn here."
29. enuii said...
Tipping P, we could do a modern day version of Dick Whittington, where instead of the streets of London being paved in gold, Dick is going to London to get double minimum wage.
30. denzil said...
enuii, great minds think alike. I was reading tipping point's post and the vision of Dick Whittington with a big pair of boots and spotted hankerchief tied to a stick stuck up over his shoulder came into my head. Then I scrolled down to your post.
Whatever is this country coming to? If I worked for the minimum wage and was told it was to be cut I think I would attempt to revolt and spike the heads of MP's on tower bridge.
31. tipping point said...
Once the entire middle class have left the north east and have herded the unemployed into city ghetto's the countryside will be free for pheasant shooting and fishing. It'll be the modern day equivalent of the highland clearances.
32. Mjs9691 said...
Luxury; chatting to the local Indian restaurant owner recently he tells me he employs family members from India on £1 an hour. They are more than happy, as it allows them to go back to India periodically and have a few months off at a time! People better get used to earning lower wages and accept below inflation pay rises from now on or kiss goobye to their jobs to off shoring and or immigrant labour. Just make sure you can afford to live on a fiver an hour; i.e. get out of debt if possible!
33. nopensionnohouse said...
Enuii – you are bang on! Classic. I wonder how much I have fallen for that over the years?
I reckon they should be lowering the “benefits” so that people would “benefit” from going to work (see what is did there).
34. shipbuilder said...
What a great attitude everyone has....let's go for that race to the bottom - then we'll all be better off, won't we?
35. shipbuilder said...
Waiting for HPC - what a guy you are - would you really welcome £2 an hour in the UK? You put the average BTLer's greed in the shade.
36. Dsndare500 said...
Whata great idea - all immigrants will go to live in London!! It really is paved with gold!!!