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What Are The True Benefits Of A National Minimum Wage; A) For The Employees B) For The Employers

4628 words - 19 pages

INTRODUCTION:The topic that I have chosen to discuss is the very controversial National Minimum Wage, which has recently (April 99) been introduced into the British Economy for the first time. In the preceding work I will be undertaking a research review of the affects that the Minimum wage will have, I will especially be focusing upon the costs and benefits of the scheme for employers and their employees. Therefore the question of which I have fronted is as follows;·What are the true benefits of the National Minimum Wage for Employers and Employees?In an attempt to answer this common political and social question I will produce a literature review. The review will analyse and ...view middle of the document...

However, as the US and UK political, social and cultural gap is narrow, the lack of research will not hinder this review, because in all probability what is being experienced in the US will be mirrored here in the UK within the next five to ten years.The justification of choosing the NMW for this review is that it's one of the most relevant and debated issues currently with-in the UK, and that each side offers heated arguments, whether you are for or against its aims and principles. Also, through previous modules and courses studied at A level and University, I have come to learn of the impact and widespread influence that a Minimum wage has and some of the political and social issues that arise from it. Also through personal experience I have seen both the positive and negative affects of a NMW, and so I am interested in the actual benefits and costs incurred in the business environment.I would now like to give a brief introduction to the minimum wage and it's application into the British Economy. The 'New' Labour Government introduced the NMW in April 1999 with the aim of "introducing it in such a way that it would bring substantial benefits to low paid workers without imposing undue burdens on business and the economy" (Gilman, 2000). Therefore the overriding aim is that a NMW would help reduce the amount of low-paid working families near or on the poverty line, by increasing their wage, or by increasing their incentives to work. However criticisms of the NMW has been widespread with many theorists holding the opinion that this scheme has not had a positive effect, but has instead limited and reduced the opportunities for these low-income families to gain work. It has also been argued that the affects on businesses have been more indirect, but have had a negative impact on Competitiveness and growth, especially in small-to-medium sized enterprises (SME's). I feel that the differing of opinions are well summed up in the following quote:Continued...."It is a well-known fact that no two economists ever agree, but when it comes to the effects of a minimum wage differences of opinion are more vehement and heated than in almost any other area of economics"(Giles, 1999)So with these differing opinions and extensive research supporting them, what are the true benefits of the NMW for employers and employees? Indeed if there are any.LITERATURE REVIEW:The majority of the research and literature that has been produced about the NMW and that I will be focusing on, mainly centres around the one main argument and debate, that is to what extent and benefit does the NMW have on employment and unemployment? Many of the Journals and articles that I will be reviewing offer differing opinions on this subject matter, with many believing that the NMW does have an affect, whilst others believe that it does not. Each group of writers (does or doesn't) seem to offer relevant and supportive research to back-up their claims. So what type of research is this and just how...

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