Read the information below about a proposed rise in the national minimum wage. The government wants to improve living standards for low-paid workers. MME Cl...
Question 1 Report
Read the information below about a proposed rise in the national minimum wage. The government wants to improve living standards for low-paid workers. MME Cleaning employs 14 cleaners and pays each of them £10.20 per hour for a 35-hour week. The proposed minimum wage is £11.00 per hour. MME has limited cash reserves and competes with several local cleaning businesses. Its manager is considering higher prices, fewer working hours, or investment in equipment that may increase productivity.
(a) State what is meant by a minimum wage. [2]
(b) Calculate the increase in weekly wage cost for MME if all 14 cleaners keep the same hours. [2]
(c) Analyse one possible benefit of a higher minimum wage for MME Cleaning. [3]
(d) Discuss one reason why the government may still support a higher minimum wage despite possible job losses. [3]
Answer Details
(a) A minimum wage is the lowest hourly rate of pay that employers are legally allowed to pay workers. [2]
(b) The increase in hourly pay is:
\[£11.00-£10.20=£0.80\]
For 14 cleaners each working 35 hours:
\[£0.80\times35\times14=£392\]
The weekly wage cost rises by £392. [2]
(c) Higher pay may improve cleaners' motivation. This can reduce absence and staff turnover, so MME may spend less on recruiting and training replacements. More motivated workers may also provide better cleaning quality, helping customer satisfaction and profit. [3]
(d) The government may support a higher minimum wage because it increases the income of low-paid households. This can reduce poverty and improve living standards. Workers may also spend more in local businesses, increasing demand, even though some employers may respond by reducing jobs or hours. [3]
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