Essay
Unit 1 D2
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Essay of 3 pages for the course Unit 1: The Business Environment at NEWVIc (BTEC WORK)
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In this assignment I will describe what is meant by minimum wage and what is it,followed by the value of minimum wage for adults. I will also describe the
requirement for businesses to implement the minimum wage and how it affects
the operations of the business. Additionally I will give my own opinion about the
impact of the rise in interest rates in UK for Tesco.
The minimum wage is the least amount that the employee must receive for his
or her performance. These values are permitted by law and must be paid or
otherwise the business could be abandoned.
Minimum wage rate is paid according to different age the employee lies on. This
is the extract that can be found on the government’s official website which is
https://www.gov.uk/national-minimum-wage-rates, for example an adult must be
paid his minimum wage of £6.50/hour but however he can be paid more but not
less than this. It should also be noted that anyone under 21 or 18 have different
wage rates, as a teenager about 19 years old would be paid his minimum wage
of £5.13/hour where as the adult have a huge different of about £1.37/hour. But
it should also be noticed that the government keeps on changing the minimum
wage rate as the economy is affected every year so the employer’s should keep
that in mind.
Businesses like Tesco must pay the minimum wage or otherwise the business can
be sued and hence it would be closed down as it is illegal to employee someone
and not pay their minimum wage. Not only the business would close down but it
would also have to pay the employee or employee’s compensation for not paying
them monthly. Tesco recruits more than 500,000+ employees and they must be
paid their minimum wage, but as Tesco is recruiting the best employees to give
their customers a very good experience they are paying their employees more
than their minimum wage, but however the new employees starts with the
minimum wage but as they get experience, they make space for their salary as
well which is hence increased up to even £10.00 per hour. This increases Tesco’s
overheads but as Tesco operates like labor intensive way, they must employee
labor force so that the customers are assisted while they shop at Tesco. If the
minimum wage rate increases then it would be a great burden for Tesco as they
would have to pay their employees more. Not only one employee but all the
employees they have offered to recruit, as a result their overheads would rise
terribly. As Tesco would have to pay their minimum wage rates, on the other
hand the experienced staff members will also see the chance to increase their
wage as they have the opportunity to earn more for the hours they work. But as
Tesco will need the experienced staff more than the ordinary staff because of
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, their experience and services for Tesco, they could also threaten to increase their
wage or hence they will terminate their contract. Tesco can’t afford this to
happen as they have invested time and training costs on them as a result they
would pay the employee high wages so that he/she sticks with them.
Tesco on the other hand would have to increase the prices for their products so
that they can meet their overheads and make some profits so that they could
return something to their investors as well. Consequently if the prices for the
products are increased then customers would turn to their rivals and hence
decrease the sales of Tesco, which Tesco clearly can’t afford. As a result Tesco
will delayer some employees which they think are useless or are no longer
required this will help them to lower their overheads and make profit with the
remaining staff members. But delayering staff members would put pressure on
other employees and hence will decrease the quality work of their employees in
the form of their service and their productivity.
Interest rate is the amount charges as a percentage of the use of assets. Interest
rates are increased/decreased or noted down at the end of the annual year. The
assets could include cash, goods, machinery, vehicle and building etc. The
interest rates depends on the borrower, as if the borrower has a less risk of
getting bankrupt or not paying them pack then the interest rates are low but if
it’s the opposite then the interest rates tends to be on the higher side as well.
If Tesco is lended money from the government, then the interest rates would
depend on the position of the company, as if the company is in the state to
return the assets/money easily then the interest rates would be low but if its high
then the interest rates would be high and as a result it will help the costs to
increase hence the business would increase their overheads. As the overheads
would increase the business would have to find alternative ways to bring the cost
down or to increase the profits, one of the possibilities is that the prices of
products could be increased but if Tesco does that then Tesco should also realise
that customers would be ready to face their rivals who will find the opportunity
to give reasonable prices for the same products, hence Tesco will lose customers
as well as their chance to make more money. Another possibility is that Tesco will
recruit less people or might even fire some employees to decrease their
overheads but the results would be identical as employees won’t be loyal and
might fear that they could also be fired.
Secondly Tesco should also realise that customers would also have to pay
interest on their personal loans for example car loans and home loans. The
higher the interest rates, the less money would customers have with themselves
and hence during this process customers tend to save more rather than
spending all the money they have. During the process customers will lose the
ability to buy more products or enjoy services, so businesses overall would suffer
a decrease in sales. As a result Tesco will have to meet their overheads and make
some profits but as few products would be sold, profits won’t be enough to cover
up, as a result some employees will have to be unemployed. They might even
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