It is economically very rational for employees’ salaries to be fully funded by their employer, and not supplemented by the tax payer. It is equivalently rational for all those who work full time to be paid an amount that is sufficient for them to live on. Consequently, it is very sensible for government to implement policies which encourage and demand employers pay to their workforce a salary which allows them to afford adequate housing, food, clothing and recreation for themselves and their dependents.
Social psychologists have also been telling us in different ways over many years that money is only part of the reason we work, and for a surprisingly large proportion of us our salary is not our foremost consideration when we chose a job or a career.
This latter idea suggests that in a competitive labour market a higher salary is not necessarily going to attract the best candidates, or that the lack of a salary rise will necessarily see employees leave. It also begs the question what is the best way to attract and retain the best employees?
In my view people work for and are motivated to work for organisations where they are liked, respected and feel part of a team, and this view is supported by a considerable amount of research undertaken into employee engagement. This being the case, the real question is how can employees time and skills be most efficiently used to the benefit of their employer, and not that they have to be paid more.
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