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£15 UK Minimum Wage May Not Be The Best Way To Tackle Poverty

£15 UK minimum wage may not be the best way to tackle poverty

Labour members on Tuesday backed a £15-an-hour minimum wage at their annual party conference in Brighton. Although the vote was not binding and the policy is unlikely to be adopted by Keir Starmer, it has kicked off a debate over whether the legal pay floor should rise or whether an increase would drive up unemployment as the economy emerges from the coronavirus pandemic.

Who suggested the figure is not clear but it does echo the “fight for $15” campaign of US activists, a sum that McDonald’s workers in Britain have said should be paid in sterling. Their campaign, backed by the Bakers, Food and Allied Workers Union, was touted on a banner that Starmer was pictured standing near two years ago. The motion passed at conference on Tuesday was tabled by the GMB union. Starmer has pledged a £10 minimum wage, the same as in the 2019 Labour manifesto and still lobbied for by the TUC.

Almost 2 million workers earn close to the wage floor, which is set at £8.91 an hour for over-23s and is called the national living wage by the government. Figures from the Low Pay Commission, which advises the government on setting the rate, suggest 6.6 million workers – about a fifth of the total workforce – earn less than £10.90 an hour.

Steady gains have been made in the minimum wage over the two decades since its launch under Tony Blair in April 1999 at an initial rate of £3.60 for over-22s. Since then it has risen faster than average earnings and inflation without damaging jobs, taking the UK’s minimum wage from the middle of the pack among wealthy nations to one of the highest in the western world.

Although opposed by the Conservatives at first, successive Tory-led governments have raised it, hitting a target for the headline rate to stand at 60% of median earnings by 2020. The Tories have promised to “end low pay” by lifting the minimum wage to two-thirds of median earnings – about £10.50 an hour – by 2024. No EU or G7 country has a minimum wage approaching two-thirds of median earnings.

However, the benchmark against which the minimum is pegged has barely shifted. This is because the UK has had the worst decade for average wage growth since the 19th century, with a worker earning about the same per week in July this year as in February 2008 after taking account of inflation.

According to the latest official figures, median hourly pay in the UK was £13.65 last year, meaning an immediate rise to £15 would affect a wide range of jobs, including some occupations typically considered outside low pay brackets, such as media advisers and estate agents.

Although there is little evidence that the minimum wage has reduced UK employment levels over the past two decades, economists say a sudden jump would probably drive up job losses. Giles Wilkes, a senior fellow at the Institute for Government, said a rate of £15 could add £73bn to employers’ wage bills. “The jobs would disappear,” he said.

Tom Ironside, the director of business and regulation at the British Retail Consortium, the trade body for some of the UK’s biggest employers, said: “Retailers support the objective of higher wages in the industry and have been working hard in recent years to secure the productivity improvements needed to ensure such increases are sustainable. However, increasing the national living wage to the level that has been proposed in some quarters would be unsustainable, adding very significantly to the cumulative pressures that are already facing the retail industry.”

Kate Nicholls, the chief executive of UKHospitality, which represents thousands of restaurants, bars and hotels, said: “A sudden, significant leap to £15 at a severely challenging time for venues would risk both job losses and price hikes, both of which would damage the sector just as it is trying to recover from the costs of closures and trading restrictions during Covid.”

A £15 rate is likely to become more realistic over time, particularly if earnings rise sharply, as expected by some economists amid mounting inflationary pressures and labour shortages in Britain’s post-lockdown economy.

There are concerns that minimum wage rises have led employers to look for savings elsewhere by whittling away at terms and conditions. The widespread adoption of zero-hours contracts is seen as one way in which employers have sought to make savings by imposing more flexibility on workers.

The coffee shop chain Pret a Manger recently raised starting hourly pay to £9.40 but that came after it had stopped paying workers for breaks – so that someone on an eight-hour shift had already seen their pay fall by 6%.

When Morrisons said it would guarantee pay of at least £10 for workers in January, it admitted it offset a quarter of the cost by scrapping a discretionary annual bonus scheme. Tesco made the same move in 2019, while Sainsbury’s cut paid breaks, annual bonuses and premium pay for Sundays.

On the current minimum wage, an adult working a 37.5-hour week would earn about £17,400 a year. Government figures suggest that a £15 rate would place a full-time worker in the current top 40% of incomes in Britain before tax.

“For me, that shows we might be reaching the limit of how much we can improve living standards by improving the minimum wage,” said Dave Innes, the head of economics at the Joseph Rowntree Foundation. “When we talk to workers living in poverty, they might not necessarily complain about hourly wages but what hours they have to meet their living costs, and if they can fit them around their family commitments.”

Experts believe a more powerful way to tackle poverty would be to bear down on zero-hours contracts and ensuring employees have more predictable work patterns.

Minimum-wage workers are more likely not to get the hours they require, with 15% of the lowest-paid tenth of UK workers wanting more hours, compared with only 3% among the highest-paid tenth.

Nye Cominetti, a senior economist at the Resolution Foundation, said: “It’s the predictability of hours that matters as well. Obviously, a change in hours, a few in either direction, could have a big impact on your pay each week. There’s more that can be done for low-paid workers than just the minimum wage.”

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Senators reject bill seeking to to reduce CBN’s regulatory power on FX market

Nigerian senators have rejected a bill seeking to amend the Foreign Exchange Act of 2004 expected to reduce the regulatory function of the Central Bank of Nigeria on the Fx Market.

The bill, titled “The Foreign Exchange (Control and Monitoring) Bill, 2024 (SB. 353),” was sponsored by Sani Musa (APC-Niger), Chairman of the Senate Committee on Finance, and was first read on Tuesday, February 20.

According to NAN, Musa described the bill as crucial legislation intended to repeal the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, Cap. F34, Laws of the Federation of Nigeria, 2004.

He stated that the proposed law would regulate, monitor, and supervise market transactions and related matters.

He added that the bill will stabilize the country’s foreign exchange market.

“The Bill seeks to stabilize the value of the currency by ensuring the liberalization of foreign exchange transactions to maintain an equilibrium of the balance of international payments.”

However, senators vehemently opposed the bill.

They said it would be counterproductive to CBN’s effort at stabilizing the foreign exchange market.

Senators who opposed the bill are Solomon Adeola (Chairman of the Committee on Appropriation), Tokunbo Abiru (Chairman of the Committee on Banking, Insurance, and Other Financial Institutions), and Aliyu Wadada (Chairman of the Senate Public Accounts Committee.

Senator Ibrahim Dankwambo (APC-Gombe), giving reason for opposing the bill said that passing such a law would confuse Nigerians.

Similarly, Senator Adams Oshiomhole (APC-Edo) pointed out that the senators who had spoken had meticulously summarized and amplified the contradictions and negative implications of passing the law.

Oshiomhole said he believes the bill should not proceed further, as it would effectively take over the CBN’s monetary policy regulations.

The President of the Senate, Godswill Akpabio, urged Senator Musa to withdraw the proposed law for further consultations but the senator declined.

Senator Akpabio then called for a voice vote to decide its approval or rejection for a second reading and the majority of lawmakers voted against it.

The development comes as the Naira recorded its first appreciationp against the dollar on Thursday, exchanging at N1,554.65 per dollar.

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Oyebanji Seeks Belgium’s Partnership in Technology, Agriculture, Intellectual Capacity Devt for Wealth Creation

Ekiti State Governor, Mr Biodun Oyebanji says his administration is building blocks for mutual bilateral relationships between the State and developed countries of the world to turn around the fortunes of its citizens.

Governor Oyebanji made this known during a meeting with the Belgium Ambassador to Nigeria, Mr Pieter Leenknegt at the Belgium Embassy in Abuja, on Wednesday, where potential areas of collaboration were discussed.

Governor Oyebanji who was accompanied by the some state officials, including Commissioner for Budget, Economic Planning and Performance Management, Mr Niyi Adebayo; and Commissioner for Finance, Mr Akin Oyebode, DG office of partnership Biodun Oyeleye, highlighted some critical areas of the State’s 30 – year development plan.

He noted that the state government has a clear vision of opportunities in the areas of ecosystem innovation, technology, renewable energy, environmental management and agricultural production and exportation as well as intellectual capacity development for wealth creation.

“Our vision for Ekiti State is clear. Despite the various challenges, indices and factors being that we are landlocked, we are committed to exploring and leveraging opportunities in ecosystem innovation, technology, renewable energy, and agricultural production. Collaboration with developed nations is crucial for the actualization of our 30-year development plan and ensure sustainable growth and prosperity for our people.”

The Governor highlighted the state’s substantial investments in social programs, commercial agriculture, and various intervention initiatives aimed at boosting the purchasing power of Ekiti’s citizens stressing the necessity of international collaboration to fully realize the state’s ambitious 30-year development plan.

In his response, Ambassador Leenknegt acknowledged Ekiti state’s efforts, which align with global best practices and ECOWAS standards. He advised the Ekiti government to expedite the completion of the state’s airport to improve access and connectivity.

He commended the initiatives behind the Ekiti Knowledge zone noting its potential to transform local knowledge into wealth, expressing Belgium’s interest in partnering with Ekiti State in areas such as communication technology, transportation, and tropical agriculture, including cacao and palm kernel production as well as enhancing academic partnerships between Belgian institutions and universities in Ekiti State.

“We recognize and appreciate the significant strides being made by the Ekiti State government. The Ekiti Knowledge Zone is a remarkable initiative with the potential to turn local knowledge into wealth. Belgium is keen to explore collaboration in areas such as communication technology, transportation, and tropical agriculture, including cacao and palm kernel production.” Said the Ambassador

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NCAA to sanction airlines over deceitful departure schedules

National carrier gets licence today, local airlines fault process

The Nigeria Civil Aviation Authority (NCAA) has condemned what it calls the prevalent cases of deceitful departure time scheduling by airlines, warning the erring airlines to desist from the infraction or face dire regulatory actions.

The Acting Director General, Civil Aviation, Nigeria, Captain Chris Najomo, while declaring this on Tuesday at the Authority’s corporate headquarters in Abuja, said the NCAA now runs a zero-tolerance approach to regulatory infractions.

Speaking through the NCAA Director of Public Affairs and Consumer Protection, Mr. Michael Achimugu, the acting DG warned the airlines to desist from the infraction or face dire regulatory actions.

“He made the ease of doing business the crux of his action plan for the NCAA. In line with that action plan, he has made processes for licensing easy for operators. The time to secure AOC is now shorter and less cumbersome than it used to be in the past,” he stated.

“The NCAA therefore expects reciprocity from airlines. Chief of which is world-class services to passengers.

Najomo said that if the NCAA is making doing business easier for operators, the operators must satisfy the passengers too with superior services.

He said, “It has come to our notice that some airlines are being reported for advertising deceitful departure times. The NCAA regulation says no airline shall display deceitful passenger departure time at its counter, advert material, or on its website.

“We want to make it very clear that the DGCA has directed monitoring and offenders will face serious regulatory actions.”

According to him, the Authority believes in safety, discipline, and economic regulation which is evidenced in the recent suspension of ten PNCF holders for failing to comply with the recertification advisory issued in April 2024.

He indicated that whilst the NCAA supports airlines to be profitable because of their critical value to the economy, it is important passengers are treated fairly.

Speaking about the ease of doing business environment at the NCAA, Capt. Najomo said the ease of business is an area the Authority will continue to improve.

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