At the last Chamber Talk, Chief Minister Lyndon Farnham declared that he was committed to raising the minimum wage towards a living wage over the next two years. He said support would be given to businesses which had difficulty because of the nature of their industry.
The notion of helping the most vulnerable in society, of addressing poverty, is currently largely done by the mitigating factor of income support, which is means tested to ensure it gets to where it is needed most. If the thresholds are too low, people suffer deprivation, but if too high, it becomes a disincentive to work.
As the minimum wage stands, because it is below the living wage, employers are effectively having their business subsidised by income support to bridge the gap. This was something discussed a few years ago when I was chatting to two Constables at a meeting. One in particular did not see why the more profitable sectors should benefit in this way.
Some businesses - such as agriculture and hospitality - have historically struggled to make ends meet as the minimum wage increases. But a lot of other businesses - including the major industry in Jersey - the finance industry - really suffers little hardship. And the question which must surely be asked: why should the States subsidise them when they can well afford an increase in the minimum wage?
By increasing the minimum wage, but targeting selectively with some sort of subsidy, the kinds of industry that because of their structure and the nature of their industry have problems with remaining a going concern, those businesses which can well afford the increase will have less effective subsidy of their staff by income support. Quite what measures could be put in place to mitigate need discussion, but one way already in place is the level of offsets.
Where accommodation or accommodation and food are provided to employees as part of their employment package, maximum values are attributed to those benefits which can be taken into account when calculating whether an employee has been paid the Minimum Wage. Those are known as offsets.
Other measures may include tax incentives, subsidies, or training programs to help businesses adapt to higher labour costs.
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