Two-part uplift proposed to achieve parity with Living Wage
The Island's Minimum Wage could be increased this year to match the current Living Wage, if Tynwald gives a proposed uplift the go-ahead next month.
The Living Wage currently stands at £13.05.
If approved, Minimum Wage would be increased in two stages; from £11.45 per hour (where it currently stands) to £12.25 from 1 April, and then up to £13.05 from 1 October.
Meanwhile, the youth rate, for those over compulsory school leaving age but not yet 18, will increase from £8.75 to £9.55 from April and then up to £10.35 from October.
Achieving parity between both wage rates within five years has been one of Tynwald's aims since 2021, when it accepted a recommendation of the Tynwald Select Committee on Poverty.
The Department for Enterprise says the phasing in of the proposed increases 'seeks to strike a balance between ensuring the Island remains an attractive place to live and work, prioritising fair wages whilst recognising the impact on some businesses in the economy'.
It also follows concerns expressed by the Minimum Wage Committee regarding the impact of single increase in April 2025.
Making sure the Island doesn't fall behind
Enterprise Minister Tim Johnston says: "In July 2021, Tynwald resolved that the Minimum Wage should reach parity with the Living Wage within five years.
"The current administration, through a commitment in the Island Plan, set the ambition of delivering on this Tynwald resolution by April 2025. The Department, working closely with Treasury and the Council of Ministers, has sought to bring forward a pragmatic proposal which delivers the will of Tynwald but also seeks to provide a slightly longer lead in for businesses.
"In addition, the overall increase ensures that the Isle of Man does not fall behind our close counterparts in the UK, Channel Islands and Ireland and is able to maintain a strong and competitive proposition when seeking to fill labour shortages and promote the Island as a secure, vibrant and sustainable place to live and work.
"We recognise that many businesses are navigating significant challenges and that these proposed increases may cause concern and have an impact on businesses, particularly small businesses, in our domestic economy."
He added: "The hope is that the two-step increase will allow them more time to prepare and will also help those in our domestic economy trade through a valuable TT period before further wage increases arise.
"The Department offers a range of support Schemes for local businesses, including funding, training, and advisory services which can be accessed to support a range of initiatives including, importantly, measures which can improve productivity.
"In addition, work is also underway to support the local economy through the Local Economy Strategy and additional business support schemes, which will go before Tynwald in January. I would encourage any business with concerns, or who wishes to find out more about potential support, to contact the Department directly, or through the relevant Executive Agency."
Businesses facing 'significant challenges'
Treasury Minister Alex Allinson says: "When Tynwald first resolved to deliver parity between the Minimum and Living Wage rates, clearly no one was aware of the significant challenges businesses would face, including the increased inflationary pressures driven by external events in recent years.
"It is imperative however, that in order to move forward, we strike a balance between meeting the needs of our community and prioritising fair wages, whilst also supporting the financial stability of businesses to ensure our commitment of a sustainable and secure economy for the future.
"I believe that the proposals deliver this balanced approach and would echo the comments of the Minister for Enterprise in encouraging businesses to explore the range of potential support available to them, should they have any concerns."
Review
DfE and Treasury have also announced an agreement to 'undertake a review of the current process for determining proposals in respect of the Minimum Wage, consider the current statutory requirements prescribed in the Minimum Wage Act, the policy position of alignment with the Living Wage as well as exploring other options for future consideration.'
The Department for Enterprise says the Island, currently, is unique in the way it calculates the Living Wage based on a 'basket of goods approach'.
Other jurisdictions, meanwhile, take an approach pegged to Median wages.
Government says the review will be informed by a consultation which was undertaken last year, and 'learnings from the recent process in determining the current proposals'.
The proposals will be considered when Tynwald sits from 18 February.
Want to share your view on the proposed increase in Minimum Wage? How do you think it will impact your business? Contact: newsroom@manxradio.com
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