Admitting that you got it wrong is never easy, and seems particularly painful for politicians. Unless of course the politician in question is Boris Johnson, who rarely appears flustered by u-turns, backtracking or the public airing of his fallibilities.
This week, BoJo urged all of the capital’s firms to pay a so-called London Living Wage of £7.45 an hour to help lower paid staff meet the prohibitive costs of living in the city. Johnson opposed the national minimum wage as recently as 2004 when he wrote that it “would probably destroy jobs”.
I’m not going to speculate on the origin of Johnson’s change of heart, but I do cautiously welcome it, even if I think he’s got a mountain to climb if he’s to convince employers of all sizes that it makes good business sense. Like Johnson, small business groups initially resisted the introduction of the minimum wage,
predicting bankruptcies on a huge scale if the legislation saw the light of day. Of course, nothing of the sort occurred, and a national minimum wage actually improved conditions for small businesses by levelling the playing field between fair and illegitimate employers.
The catering and hospitality industry has traditionally been home to some of the worst offenders when it comes to underpaid staff, especially in the context of some questionable tactics in its tipping policies. The Government says it is now committed to pushing through legislation that will stop tips from counting towards the minimum wage of hospitality trade workers in future. That won’t resolve the issue of the overall transparency of the distribution of tips, leaving some to argue that it’s a loophole that needs closing to stop unscrupulous firms taking advantage of both their employees and their customers.
I’m reluctant to recommend that the Government meddles too deeply in the affairs of entrepreneurs - employers in all sectors should be far sighted enough to know that shoddy remuneration policies never equate to sound business practice. But profiteering restaurant chains are one thing, growing entrepreneurial businesses are another.
Johnson says raising the London Living Wage “makes good business sense, contributing to better recruitment, higher productivity, and a more loyal workforce with high morale”. But for many of London’s smaller businesses, it would represent an inflation busting increase in staff costs. Johnson conceded that not all employers were convinced, and revealed that plans to stop hospitality firms being officially recommended unless they paid the LLW had been pulled when he realised there would be hardly any left to promote. While employers adopting an increased minimum may well be rewarded when turnover and absenteeism is cut while productivity and professionalism improves, whether smaller businesses can actually afford the increase is open to debate.
© Crimson Business Ltd. 2008