The National Minimum Wage will wipe-out small businesses in the United Kingdom.
Guy Phoenix, 23 April 2024
In March 2019 the Minimum Wage was £7.83 per hour for workers of 21 years of age or older. Since April 2024 it has been £11.44 per hour. That’s a 46% increase in 5 years, an average increase of 9.2% per year.
One of the most successful investors of all time is Warren Buffet (the ‘Oracle of Omaha’). These days he provides the benefit of his experience and wisdom free of charge to business school students, and one of the first things he always talks about is the key role of compound interest in investing.
Very simply, if you invest £100 at an interest rate of 10%, and ensure that you reinvest the interest each year, in just over 7 years you will more than double your initial investment. It’s a basic lesson in the importance of long-term planning for savings and investment, and why ‘buy and hold’ is invariably the best strategy in investment.
What does compound interest have to do with the Minimum wage? Well, nothing from an investment perspective, but the concept is hugely important to small businesses given the growth in the Minimum wage being imposed by Government.
Coming back to my opening comments, if the Government continues to increase the minimum wage by 9.2% each year, then in just over 3 years’ time it will have doubled since March 2019.
I repeat – it will have doubled in just over 7 years.
Does anyone in Government have any understanding of the impact this is having and will have on small businesses? Almost without exception, the biggest cost of running a small business is wages for employees. On the current trajectory the Government is doubling that every 7 years or so.
As of today, the minimum wage for someone working 40 hours per week is £23,795. Assuming the same level of increases, in 3 years’ time it will be £31k and in 8 years’ time it will be £48k. £48,000! Now, you might think, ‘well that’s great! I can work a minimum wage job and before too long I’ll be on £48k!’.
The problem is, you won’t. For the simple reason that there isn’t a small business in the country that can afford to pay its most junior staff £48k. They would likely be stretched to pay that kind of salary to their most senior staff.
So you won’t be being paid £48k, because your employer will no longer exist. They will have sold-up or gone bankrupt.
I continuously hear the same platitudes from Government ministers and MPs from all sides of the Aisle – ‘Small businesses are the engine of the UK economy’. In that they are correct. And yet they are going out of their way to ensure that SMEs are destroyed.
The National Minimum Wage is just one of the many slow-strangulation techniques being applied to SMEs. I will write about some of the other techniques in a later article. For now, though, the Minimum Wage increases are enough – more than enough – to help our ‘Government’ assist the Globalist agenda of transferring all business control, ownership and wealth to multi-nationals.
The Heritage Party is committed to putting an end to this madness. We won’t just say that we support SMEs, we will actually support them. Whether it’s through deregulation, ensuring self-sufficiency (eg for farmers) or by putting a stop to these insane increases in the minimum wage, the Heritage Party is the only party genuinely on the side of small business.
Guy Phoenix is a small business owner and Business Spokesman for the Heritage Party.