IGCSE, A Level Business Student Forum

Q 35 Analyse the disadvantages of offering minimum wage rate to a business [6]

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Q 35 Analyse the disadvantages of offering minimum wage rate to a business [6]

Possible Structure:
[KN]difficulty in retaining existing employees
[AN]many employees feel demotivated when they are being paid less even when they put in all their effort and improve their productivity and efficiency
[AN+]thus there are higher chances of turnover making the business lose its competitive edge

[KN]difficulty in attracting skilled workers
[AN]many of those unemployed, yet skilled workers, will not go towards jobs that will require premium quality skill while providing them low pay/working conditions
[AN+]thus the business will have to face costs in hiring, training and fixing errors that unskilled workers cause in the business

[KN] difficulty in retaining employees
[AN] as when an employee is putting in maximum effort and is tiring himself yet doesn't get the amount that is deserved it demotivates them to do any further duties
[AN+] thus leading to increase in employee turnover rate which can slow down production and decrease customer satisfaction
[KN] difficulty in attracting skilled workers
[AN] skilled workers would rather stay unemployed then get hired in a job where their skillset is taken for granted and they are paid a low sum for doing efficient work
[AN+] thus business will have to face the costs of training unskilled workers which may even be a higher expense then high wages

{KN} Reduced Employee Motivation and Engagement
{AN} Employees receiving minimum wage may lack motivation to go above and beyond in their roles or invest in professional development.
{AN+} Reduced motivation and engagement can lead to lower productivity, increased turnover, and challenges in fostering a positive work culture. It may also hinder innovation and creativity within the workforce.

{KN} Negative Impact on Company Image
{AN} Businesses paying minimum wage may be perceived as lacking in social responsibility or a commitment to employee well-being.
{AN+} A negative public image can result in customer dissatisfaction, negative reviews, and challenges in attracting top talent. It may also lead to long-term damage to the company's brand and reputation.

[KN] Reduced Investment and Growth
[AN] Businesses facing increased labor costs may be forced to redirect resources away from investments in innovation, expansion, or employee training.
[AN+] This can hinder long-term growth, productivity, and overall competitiveness in the marketplace.

[KN] Reduced Job Opportunities
[AN] Faced with higher labor costs, businesses may respond by reducing their workforce or automating tasks to offset the financial burden.
[AN+] This can lead to job losses, especially among low-skilled workers, and contribute to higher unemployment rates.

KN]difficulty keeping hold of current staff members
AN]many workers experience low motivation when they receive lower pay, despite their best efforts to increase output and efficiency
[AN+]as a result, there is a greater likelihood of turnover
(Kn) Experience high recruitment cost
(An) as business pay less to the employees the workers will be demotivated and try find out the organization which pay more inorder to be self sufficient
(An+) thus because of which many workers would leave and business have to face a cost in hiring and training new workers

[KN] High turnover rates.
[AN] Employees may look for better paying jobs.
[AN+] Thus leading to decreased productivity, and spread of negative work environment.

[KN] Difficulty Attracting Skilled Workers.
[AN] This could result in a workforce that lacks expertise and may impact the quality of products or services produced.
[AN+] Thus more chances of errors arising hence leading to a decreased efficiency.