How The Wage Increases Affect Cost
Page 76
Page 79
If you've noticed an error in this article please click here to report it so we can fix it.
IN this series on October 7 1 made a.comparison between the operating costs of a 5-ton oiler when averaging 400 miles per week in 1957. and •again in 1960. The latter figure included wages calculated on the assumption that when the new Road Haulage 'Wages Order was confirmed the increase would amount to approximately. six per cent.
Grade 1 Rates
In accordance with the policy adopted when compiling the current edition of The Commercial Motor' Tables of Operating Costs," wages calculations will be based on those applicable to the intermediate (Grade 1). As set out in R.H.(70) the minimum remuneration per week in this category for adult drivers is as follows: For vehicles with a carrying capacity up to 5 tons-£8 18s.; over 5 to 10 tons-E9 5s. 6d.; over 10 to 15 tons-£9 lls. 9d.; over 15 to 18 tons-£9 19s. 3d. and over 18 tans-£10 8s. 9d. The wage for an adult attendant is similarly increased to £8 12s. 9d.
Even where no overtime payments are made, this basic minimum remuneration will not be the only expenditure incurred by employers of haulage drivers, under the heading of !` Wages." There will be the addition of the employer's National Health contribution which at present amounts to 8s. 3d. per week for adult males. Although no longer a statutory obligation, many operators also consider it prudent to pay employer's voluntary liability insurance contribution to provide the indemnity formerly given under the Workmen's Compensation Act. The amount of contribution is in relation to the total salary and, relative to the minimum rates of remuneration just quoted, would result in additions ranging from 10d. to Is. per week.
A further adjustment then has to be made to allow for two weeks' holiday per annum with pay as required ill paragraphs 18 to 22 of R.H.(70). Inclusive of National Health and voluntary insurance -contributions, and an allowance for hoildays with pay; total weekly expenditure incurred by the employer for minimum remuneration in Grade 1 areas will then be as follows: For drivers of vehicles up to 5 tons carrying capacity
£9 14s. 8d.; over 5 to 10 tons-£10 2s. 5d.; over 10 to 15 tons £10 9s. Od.; over 15 to. 18 tons-£10 16s. 10d.; over 18 tonsLI 1 6s. 9d.; and adult attendants-£9 9s. Id.
As stated in the tables, it is convenient when estimating . the cost of wages in relation to the preparation of standard can tables of costs, to accept the amount payable as statute] minimum remuneration per week regardless of the week mileage involved. Though this must be incorrect in specif instances, particularly when high weekly mileages are involve] a simple alternative method is not readily obtainable. It emphasized again that these remarks apply solely to ti preparation of standard tables. Obviously when estimatin the cost of a specific job where overtime was known, wit reasonable accuracy, to be involved, the additional' cost this would have to be included.
But any attempt to include the add tional cost of overtime working i standard tables, would presuppose tho successive additions of overtime coul be estimated, and agreed, for comparab increases in weekly mileage. This woul be a virtual impossibility because tb reasons for overtime are by no meat relative to mileage, particularly in the . days of increasing .traffic congestion an resulting loading and unloading delay However, to assist operators who ma wish to calculate wages inclusive of bot the increases allowed for in th new R.H.(70) and some measure overtime working, the following add tional wage rates are given, again applicable to operatoi based in Grade 1 areas. The • total wages payable for 50-hour week in accordance with R.H.(70), but exclusiv of allowances for insurance contributions and holidays with pa3 are as follows:For vehicles with a carrying capacity u to 5 tons-£10 8s. Q.; over 5 tons to 10 tons-£I0 17s. Id over 10 to 15 tons-£11 4s. 6d.; over 15 to 18 tons-£11 13s. 3( and over 18 tons £12 4s. 5d. For a 55-hour week the cone! ponding rates would be:£11 18s. 8d., £128,. 9d., £12 17s. Id £13 7s. 2d. and £13 19s. lid. Similarly for a 60-hour we the rates are £13 9s. Od., £14 Os. 4d., £14 9s. 10d., £15 ls. 3d and £15 15s. 7d.
1O-cwt. Van Costings
Dealing now with the operating costs of the five vehicle chosen as examples, the unladen weight of the 10-cwt, vat with petrol engine, would be around 15 cwt. with a resultin annual licence duty of £15. This would be the equivalen of 6s. per week based on a 50-week year. Allowance is thu made for two weeks per annum when the vehicle may be ol the road either for major overhaul or driver's annual holida3 As just calculated, the minimum weekly wage, inclusive o insurance contributions and appropriate allowance fo holidays with pay, for adult drivers of this category of vehicl will be £9 14s. 8d, Incidentally, it is appreciated that driver under 21 years of age may well be employed on this type o
vehicle with a resulting reduced minimum wage. But to facilitate fair comparison with larger vehicles where an adul driver would normally be employed, the higher rate of wag, is included in this estimate. nt and rates in respect of garaging the vehicle will he ined at 7s, 2d, per week,.. whilst vehicle insurance adds dher 7s. 54.1. t the standing costs. This is based on an al premium Of £18 10s. Od. payable by operators in arn risk areas. (To facilitate comparison as to the effect of the wage increase, I am .purposely. omitting to take. Int now of pending increases in vehicle insurance Costs.) Initial Outlay of £485 crest charged at a nominal rate of 3 per cent. on the initial y of £485 .would add Ss. 8d. per week, giving a total of Is. Ili for these rive items of standing cost. Assuming this van averages 200 Miles per week, the corresponding standosts. per mile would be 13.25d.
th petrol purchasedin bulk at 3s. 10d. per gallon and an .ge rate of consumption of 27 m.p.g. maintained, fuel .cast nile would amount to 1.87d. Lubricants add 0.17d. With a f tyres costing around 1,33, tyre cost per mile would be
assuming a mileage life per set of 20,000.
iintenance, inclusive of washing and servicing, is reckoned St 1.24d. per mile. To calculate the cost of depreciation, it St necessary to deduct the cost of the original set of tyres the initial price of the vehicle. A further deduetion has to be made in respect of the ultimate residual value to e at the amount to be written off. Assuming a vehicle >I 75,000 miles, the dePreciation cost per mile would be . However, as the weekly mileage is comparatively low, allowance has to be made for the possible effect of lescence. particularly as-an attractive vehicle is an imporfactor in retail delivery, on which this type of van would ially be employed.. Allowing for an additional 10 per cent. his account, the depreciation cost per mile would then lie 1.39d., giving a total running cost per mile of 5.06d. .d to the standing cost 'the resulting total operating cost is
Before and After R.H. (70)
rrespondingly the total running cost per week, when ,L.ting 200 miles, would be 14 4s. 4d., giving a total operating per week of £15 5s. 3d.
or to the coming into operation of R,H,(70), the total wage or the driver of this vehicle would have been 19 9s. 3d. the other nine items of operating costs remaining the , the total operating cost per week, when R.H.(68) applied, £14 15s. Od. and the total operating cost per mile 17.69d. total operating cost compares with the new figure of 18.1d. e unladen weight of the 3-ton petrol-engined lorry would Dproximately 2 tons 4 cwt.. with an annual licence duty 7 10s. 0c1„-the equivalent of lls, per week. Wages remain tine at £9 14s. 8d.. but rent and rates are increased to 9s. 9d. veek relative to the larger dimensions of this vehicle. The al insurance premium is now reckoned at £24 Os. Od. or 1. per week. With an initial outlay of £870 Os. Od. interest tes are raised to 10s. 5d. per week, making a total of 55. 5d. for the live items of standing costs. Because of the of vehicle, the assumed average weekly mileage will now creased to 400, with a resulting standing cost per mile of Rate of Consumption
th petrol purchased in bulk as before at 3s. 10d. per gallon. vith a reduced rate of consumption of 15 m.p.g., fuel cost tile becomes 3.07d. Lubricants are estimated to add 0.21d. a set of tyres now costing £93, but with an increased estid.mileage life of 30,000, tyrc cost per mile becomes 0.74d. itenance is now reckoned at 1.83d. per mile.
!opting the same procedure as before, but now allowing i vehicle life of 150,000 miles, the depreciation cost per is 1.09d., and total running cost 6.94d. Added to the ling cost this gives a total operating cost per mile of 14.00d. espondingly. the total operating cost per week, when tging 400 miles. would be £23 6s. 9d. This compares with al of £22 16s. 4d. when R.H.(68) was in operation, and a operating cost per mile of 13.69d. The increase is there0.31d.. or half that shown for the 10-cwt. van, although vage rates are identical for the two examples. The reason he halving of the increase is because of the additional ly mileage for the larger vehicle. The weekly cost of licensing the 7-ton oiler is estimated to be 15s. 6d., based on an annual licence duty of £38 15s. Od. . Wages now come in the next higher category, and inclusive of allowances, for insurance cohttibutions and holidays with pay amount to £10 2s. 5d. for a basic week. Rent and rates are now reckoned at . Its. 9d. per week and insurance 17s. 2d. Based on an initial outlay of #:1,525, the weekly cost of interest charges becomes 18s. 3d., giving a total standing cost per week of £13 5s. id. With an average weekly mileage of 800, the corresponding standing cost per mile will be 3.97d.
With oil fuel purchased in bulk at 3s. 101d. per gallon and a rate of consumption of 15 m.p.g. maintained, fuel cost per mile for this 7-ton oiler will be 3.12d. Lubricants are reckoned 0.25d. and tyres at 1.49d. per mile. This latter calculation is based on a cost per set of £186 and a mileage life of 30,000. Maintenance adds 2.34d. and depreciation 1.87d. per mile, still assuming a vehicle life of 150,000 miles.
Running Costs
The total for these five items of running costs thus becomes 9.07d.. making the total operating cost per mile 13.04d. Total operating costs per week are .£43 9s. 9d. This compares with £42 18s. 10d, prior to the operation of R.H.(70). The corresponding comparison between the two operating costs per mile shows an increase of 0.16d. per mile as a result of the wage increase.
The example of the 10-ton "artic " oiler chosen costs approximately £2,310. With an unladen weight of 4 tons 12 cwt. the licence cost per week would amount .to El 6s. Wages remain within the same category as the previous example, namely 5 to 10 tons, and therefore again amount to I10 2s. 5d. Rent and rates are reckoned at 13s, 4d. and insurance at £1 4s. 10d. With weekly interest charges now amounting to £1 7s. 9d. the total standing cost per week is £14 14s. 4d.
Fuel cost per mile is 4.25d. based on a rate of consumption of 11 m.p.g. Lubricants add 0.27d. and tyres 2.08d. per mile. Maintenance is reckoned to cost 2.36d. and depreciation 2.48d. per mile. This is again calculated on the assumption of a vehicle life of 150,000 with appropriate allowances for the residual values of tractor unit and trailer. This gives a total running cost per mile of 11.44d. and a total operating cost per mile of 15.85d.
16-ton "Artie"
As with the previous example it will be assumed that this vehicle averages 800 miles per week with a resulting operating cost per week of £52 17s, This compares with a total of £52 6s. Id. when R.H.(68) applied, showing an increase in the total operating cost per mile of 0.16d.
The 16-ton artic " oiler is reckoned to cost £4,690 and. with an unladen weight of 7 tons 8 cwt., to incur an annual licence duty equivalent to £2 10s. per week. Wages now fall within the rate category of 15to 18-tons and amount to £10 16s, 10d. Rent and rates are assessed at 15s. 4d., vehicle insurance £2 2s. 10d. and interest at £2 16s, 3d. per week. Total standing costs per week are therefore £19 Is. 3d.
Based on a rate of consumption of 9 m.p.g., fuel cost per mile is 5.19d. Lubricants add 0.28d. and tyres 3.00d„ whilst maintenance is assessed at 3.01d. Depreciation adds 2.55d. giving a total running cost per mile of 14.03d. Still assuming an average of 800 miles per week, the total standing cost per week would be £65 16s, 7d. and the total operating cost per mile 19.74d. This compares with 19.57d. when R.I1.(68) applied, a difference of 0,17d. per mile.
, As already mentioned, all the above castings have been calculated to include wages relative to Grade I areas. For the convenience of operators in other areas the following additional rates which will apply from next Monday are given. The statutory minimum remuneration for adult drivers whose home depot is situated in the London area is as follows: For drivers of vehicles with a carrying capacity up to and including 5 tons, £9 3se over 5 to 10 tons, £9 10s. 6c1.; over 10 to 15 tons, £9 16s. 9d.; over 15 to 18 tons, £10 4s. 3d.; and over 18 tons, £10 13s. 9d. In Grade 2 areas the corresponding rates are: £8 14s.; £9 Is. 6d.; £9 7s. 9d.; £9 15s. 3d. and £10 4s. 9d. S.B.