Benefits Of The National Living Wage

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The Scottish liberal economist and professor, Adam Smith, referred to the significance of a worker’s wages being ‘at least sufficient to maintain him’ (Adam Smith, 2007). This is actually the ideal objective of the National Living Wage introduced by the UK living wage campaign in 2001. Having UK employers paying a minimum of the basic cost of living (currently calculated at £9.40 an hour in London and £8.25 in the rest of the UK) is anticipated to result in not only a better standard of living, but also less reliance on the benefit system and an increase in productivity at the workplace. There are currently over 1000 employers voluntarily setting wages above the National Living Wage, 80% of which believe the introduction of the National Living …show more content…
For instance, Smith clearly acknowledges that the employer has the ‘advantage in the dispute’ (regarding the employee’s wages) because at the time legislations were in place to authorise combination of ‘masters’ whilst prohibiting the ‘workmen’ to do so (Smith, 2007). On the contrary, there were around 6.4 million employees that are also trade union members in 2014 (Department of Business, Innovation & Skills , 2015). Trade unions allow unification and representation of workers’ views regarding work-related issues, in order to innovate and improve conditions. However Smith is a pioneer for liberal economic views, that can be applied to the introduction of the National Living …show more content…
Therefore the government enforcing £7.20 as the minimum wage and then proposing a plan to ensure this minimum wage is £9 by 2020 (Department of Business, Innovation & Skills, 2015), is most likely to have a negative impact on the economy overall. There is no certainty that this ‘artificial direction [regulation of minimum living wage] is likely to be more advantageous to the society’ (Smith , 2007). In corroboration, the National Living Wage is described as a ‘gamble’ because if businesses find it too expensive to conform, they are more likely to invest in machines/technology and therefore increase unemployment and redundancy (The Guardian, 2015). Also, in a report that set out to outline the positive effect of National Living Wage (on work, family and finances), over a third had no positive response and only 20% gave a positive response to all 3 dimensions of change (Wills and Linneker, 2012). Hence suggesting that this enforcement only shifts the pressure of improving standards of living from the government to businesses instead, with no indication that a positive change will actually
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