The Scottish referendum due to take place September 18th 2014 will determine whether Scot’s gain independence or stay in the current UK set up. One of the main policy areas which could affect the outcome of the vote is poverty. This study will analyse poverty from an economic perspective by comparing the current UK levels of unemployment, wage rates and tax levels against the predicted changes from the Scottish government. A conclusion will then be drawn to suggest whether the Scots should vote for or against independence in the referendum.
Scotland’s unemployment rates are currently lower than the UK average. 199,000 of Scot’s are currently unemployed ...view middle of the document...
O.L) also increases as minimum wages rises as people are now attracted back into working. However the amount of unemployment will depend on the elasticity of the supply and demand curves as shown in graphs 2 and 3. The differences between the two graphs are that the level of unemployment from minimum wage will be lower the more inelastic demand and supply labour are. The elasticity of demand for jobs most likely to be affected by minimum wage would be inelastic as many of these jobs may be manual and relatively unskilled jobs with few substitutes available whereas the elasticity of supply would be elastic due to many of the jobs being less relatively unskilled therefore resulting in a potential large pool of labour available to take them on, along with small increases in wages may attract people back to work.
Minimum wage rates have always been related to inflation but since 2008 in the UK the minimum wage has been under inflation, until now where plans are being put in place to increase Britain’s minimum wage by a 3 percent increase, which would be the first above inflation increase since 2008. This is due to come into effect in October 2014 where the minimum wage will increase from £6.31 per hour to £6.50 for adult workers. (Milliken, Maclellan, 2014). Since 2009 wages in Scotland have fallen by 8.1 percent resulting in a real median household income of only £436 per week as of 2011/12. An independent Scotland want to set a Scottish minimum wage that at the very least will rise in line with inflation which if achievable will help to relieve the weight of poverty on 250,000 Scots who are currently classed as “in-work poor” as well as see 70,000 of their lowest paid earn a fair days pay. (Scotland government, 2014). Although raising the rate could cause problems such as increasing wage bills for companies which would lead to higher...