29 November 2015

Pay As You Earn: What if we took it literally?

I think the UK's method of paying employees and calculating tax (PAYE) is outdated, even though it's come a long way. I think employees should be paid literally as they work, once a day at the least. Like a continuous trickle of direct debit.

Apart from the logistical overhead, it would eradicate this concept of a 'pay day', and rather than everyone spend all their money when they receive it, people would actually learn to save up money themselves and be more savvy with money. People would be less dependent on loans and overdrafts to survive through the month.

Similarly, you could do the same with rent, mortgage payments, bills etc. You pay everyday rather than monthly or quarterly. You'd literally be able to see in real time your entire cash flow.

You could even go one step further, and send the money direct from your employer to your landlord or utility supplier, discounted because of locking in. A genuine B2B model. You could then just see the money you have left over, we'd have a true representation work input to pay ratio.

We could then implement a system to reward staff literally as they act as well. No more need for annual performance reviews: people would actively be encouraged to work hard and literally *earn*. It might get competitive, sure, but I'm sure there could be a sensible way of doing it, e.g. with set limits or cool down periods.