13:Do you think Y2M should pay its workers the same wage rate as its competitors? Justify your answer

[Dania]

Y2M is a bus operating company in the public sector. One of its objectives is to break even on every bus route. Most of its competitors are in the private sector. Y2M wants to increase the number of customers using its buses. The Finance Director has been looking at some cost data shown in the table below. This is because Y2M plans to review its pricing methods. She is worried other businesses pay workers a higher wage rate and some of its drivers may leave. She said: ‘To pay the same wage rate would increase variable cost to $2.20 per passenger per journey.’

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13:Do you think Y2M should pay its workers the same wage rate as its competitors? Justify your answer[6]

Possible KN Points:
>Help retain employees.
>Increase labour costs.
>Total costs may rise.
>Higher pay may lead to reduced services.
>Increasing pay may motivate workers.