IGCSE, A Level Business Student Forum

Q 34 Analyse the disadvantages of offering minimum wage rate to an employee [6]

Possible Structure:
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

[KN] skilled workers will not be willing to work for the same wage given to workers below them or of lower skillset then them
[AN] a skilled worker will not be prepared to give premium quality work for a low wage thus leading to demotivation to continue working which could lead to resignation
[AN+] and thus lead to workers skills not being put to use and so decrease in spending even for those who are experienced and skilled
[KN] due to minimum wage rate employee turnover will increase
[AN] and even workers who are still in job they will be inefficient leading to a slowdown in production causing a decrease in supply
[AN+] this will cause prices to increase further causing a decrease in living standards as many goods become unaffordable for households

[kn]the employee will not fully pay attention to its work
[an] bcz he will not spend his his energy on a job who is paying him less and willbe less productive
[an+] the business will loose its working efficiency and level

[kn] increase poverty level
[an] bcz minimm wage rate may not be enough to use as aindividual and may find difficult to fulfill its needs
[an+] thus the business might also ead to more employee turnovers

[KN]: Loss of motivation
[AN]: Employee may not put in all their effort in work as they are being paid to do the minimum
[AN]: A business might not get the best innovative ideas out the demotivated workforce

[KN]: Increase in employee turnover
[AN]: Employees may think of it as an ordinary temporary job and leave after some time
[AN]: Decreasing employee loyalty and loosing stability in the business

{KN} Employee Financial Strain
{AN} Minimum wage may not be sufficient to cover the basic living expenses of employees, leading to financial strain.
{AN+} Financially stressed employees may struggle with job satisfaction, engagement, and overall well-being. This can lead to increased absenteeism, reduced productivity, and a higher likelihood of turnover.

{KN} High Turnover Rates
{AN} Minimum wage jobs often have higher turnover rates as employees may seek better-paying opportunities elsewhere.
{AN+} Constant turnover creates challenges in maintaining a skilled and experienced workforce. It increases recruitment and training costs, negatively impacting the business's efficiency and productivity.

[KN] Increased Labor Costs
[AN] Implementing a minimum wage can increase labor costs for businesses, especially for those in low-margin industries or those employing a large number of low-skilled workers.
[AN+] This can strain a company's budget and reduce its profit margins.

[KN] Reduced Flexibility and Adaptability
[AN] A rigid minimum wage structure can reduce a company's flexibility in adjusting wages based on factors such as employee performance, market conditions, or regional differences.
[AN+] This can hinder a company's ability to compete effectively and adapt to changing market dynamics.

[KN] Lack of motivation to work.
[AN] Hence will reduce the morale to do job, resulting in an decrease in overall efficiency.
[AN+] Thus employees may face difficulty in covering a good living standard leading to a rise in financial stress.

[KN] Limited career development opportunities.
[AN] Hence are likely to be stuck in low-skilled positions with little room for growth.
[AN+] Thus resulting in a loss of potential to earn more, decreasing overall productivity.

[KN] Decreased employee motivation
[AN] If an employee is not getting the reward for the amount of input their giving they will be demotivated
[AN+] Reducing efficiency

[KN] Restricting growth
[AN] When an employee is only given a limited amount of money it reduces their purchasing power
[AN+] Not allowing them to fulfill their wants