What the Hell did anyone think was going to happen?
Something of a facepalm moment here:
When George Osborne announced the introduction of the national living wage, my colleagues and I, who clean the Merseyside offices of HM Revenue and Customs, were pleased. We’re not naive – we knew we wouldn’t be in line for huge pay rises. But we did think it meant the government was taking low pay a bit more seriously – and when you’re on as little money as we are, any increase is welcome. We definitely didn’t bank on the firm we work for cutting our hours to pay for it.
In one sense this is fair enough, we don't expect people cleaning offices to grasp the intricacies of the minimum wage. But we should ask those who advocate such to grasp them and quite clearly, given the furore around this, they don't. And that includes the last Chancellor who is apparently quite as gormless on this as those further to the left of him.
If you raise wages by legislative fiat then employers will purchase less of that now more expensive labour. Yes, even if it's the taxpayers coughing up for that labour - as innumerable home care contracts are finding out. There're no great profit margins here that can be raided.
There really are only two options. Either less labour is purchased or the labour that is purchased must do more:
This isn’t the first time ISS has cut our hours, or the number of staff. In one of the offices in Bootle there are 19 floors and there used to be two cleaners to each floor. Now there aren’t even enough cleaners to take a floor each. This is only going to get worse. We can’t work any harder than we already do, but that’s what is expected of us. When any of us is on holiday, the rest are now expected to cover their work for no extra money.
Both techniques appear to be being used. And do note that this insistence that labour must do more is the same as, definitionally the same as, that "raising productivity" which is said to be how adaptation will happen.
There simply is no surprise here. Grab a passing Martian with no knowledge of economics or humans, explain supply and demand to them, and they would be able to predict exactly this outcome.
Raise the price of something and people will either purchase less of it of sweat that thing harder.
Our only question left is why our own government (and, of course, the Opposition) appears to have less knowledge of labour economics than some random passing Martian?