Minimum Wage Rates Increases and Its Effects on Businesses

There are mixed reactions over the recent raise in the national minimum wage rate. Leading bodies have had conflicting views on the topic. A single viewpoint is that the raise is not enough and it is still far below the minimum wage to “live”. Controversially there have also been opposing views that small businesses would suffer as a consequence of the hike.   In this blog post, we discuss the implications of the minimum wage rate hikes.

Many Large Companies are Off Shoring to Developing Countries

In the UK, it is well documented that there is a jobs shortage, instead of the government coming up with a strategy to increase the number of jobs.  The increase is a move that is likely to steer large companies to offshore their operations to countries with cheaper labour rates. In addition, it is also probable that it will deter international companies to create jobs in the UK as labour rates can play a key role on a large company entering a new foreign market.

Small Businesses are Already Struggling to Pay Wages

If you look on the High Street, many businesses are closing down this is often due to high competition in the online marketplace resulting in lowering prices and lower margins. The increase will only reduce the already low margins as it is doubtful that the shops will increase their prices to subsidise for the wage increase, subsequently signalling even tougher times ahead for directors and their businesses.

Lately, we’ve seen well-known brands simply disappear as well as small businesses, the likes of HMV, Jessops and Comet to name some of the more high profile businesses to suffer. The closures meant that thousands of jobs were lost.

Labour charges are one of the highest expenses running a business. Any rise without an additional amount of work coming in will certainly hinder the chances of business success. If you’re a director struggling in the aftermath of the minimum wage hike then contact 123 Insolvency. They can discuss your options with you and provide you with impartial advice. Visit their website at www.123insolvency.co.uk/

This article was written on behalf of 123 Insolvency, leading national specialists in creditor’s voluntary liquidation.