Red Tape and Minimum Wage – GCSE Business Studies Revision


  • Before minimum wage was introduced in 1997, workers could be paid very low amounts!
  • This meant employees would just get a job at wherever paid the most
  • The minimum wage is the lowest amount a worker can be paid per hour’s work
  • There are some advantages, and some disadvantages
  • Advantages:
    Workers are paid fairly – they have enough money to live
    It motivates workers more… which helps productivity
    It ensures quality
  • Disadvantages:
    It costs businesses more, which damages their profits, etc.
    They might have to make some workers redundant so they can afford to pay the rest higher amounts
    Employment is now less competitive here than in places with no minimum wage… such as developing countries

Red Tape and Taxation

  • Corporation Tax is paid by a business on its profits
  • VAT (Value Added Tax) is paid on goods / services
  • Income Tax is paid by employees the money they earn
  • Government decisions about tax affect all businesses in the country
  • ‘Red tape’ is a type of law that the government makes very difficult for businesses to avoid
  • Businesses like to bend the rules to increase their profits, so they’re not too keen on red tape

About Matt

I like writing, filmmaking, programming and gaming, and prefer creating media to consuming it. On the topic of consumption, I'm also a big fan of eating.
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