SEP operates in the tertiary sector．As a social enterprise，SEP has many objectives．It collects old books from libraries and schools and sells them to customers at a low price．SEP provides training for its 10 part－time employees．SEP＇s manager wants to know how the introduction of a legal minimum wage might affect a business． Do you think the introduction of a legal minimum wage will always have a negative effect on a business? Justify your answer.

Award 1 mark for each relevant point [max 2]
Award 1 mark for each relevant explanation [max 2].
Award up to 2 marks for a justified decision as to whether the introduction of a legal minimum wage will always have a negative effect on a business.

Points might include:
- May encourage more people to apply for jobs [k] making it easier to recruit [an]
- Business may already pay above minimum wage so would have limited/no effect on costs [k]
- Increase motivation [k] increasing productivity/reduce absenteeism/labour turnover [an]
- Have to pay more to employees [k] which will increase costs [an] so may have to increase prices [an]
- May not be able to afford to pay all workers the higher wage rate [k] so may have to make redundancies [an]
- Other workers being paid more than the minimum wage may ask for a wage increase [k]
- May have to find other ways to reduce costs [k] which may reduce quality [an]

Other appropriate responses should be credited.
Justification might include:
It may increase motivation [k] increasing productivity [an]. However, it can lead to high costs [k] so prices may have to be increased [an].
The introduction of a minimum wage may not always have a negative effect as it will apply to all businesses so competitors may also have to increase their prices so the business may not lose any competitive advantage [eval]. The increase in productivity could even offset some of the increase in cost [eval].