Photo AI
Trade unions favour an increase in the national minimum wage rate - Leaving Cert Economics - Question c - 2018
Question c
Trade unions favour an increase in the national minimum wage rate. State and explain one possible economic effect of an increase in the national minimum wage for eac... show full transcript
Worked Solution & Example Answer:Trade unions favour an increase in the national minimum wage rate - Leaving Cert Economics - Question c - 2018
Step 1
Employees
Answer
An increase in the national minimum wage may lead to a higher standard of living for employees. With a raised wage, employees can afford better housing, food, and healthcare. This improvement can also reduce poverty levels, as workers have more disposable income to cover basic needs and wants.
However, there could be a negative impact, such as potential job losses, particularly if businesses struggle to absorb the increased wage costs.
Step 2
Businesses
Answer
For businesses, one possible positive economic effect of increasing the minimum wage is enhanced productivity. As workers are better compensated, they may feel more motivated and valued, leading to higher output and efficiency in their roles.
On the downside, this adjustment could lead to increased labor costs, affecting competitiveness. Businesses may need to raise prices to maintain profits, potentially resulting in a loss of market share.
Step 3
Consumers
Answer
Consumers may benefit from an increase in the national minimum wage due to better quality service. As businesses pay their employees more, they can attract skilled workers who provide improved customer service and experiences.
Conversely, consumers might face higher prices as businesses pass on the wage costs, which could affect their purchasing power and overall expenditure.