The care sector, retail and hospitality have been identified as the ones that could be hit hardest by a large increase in the island’s minimum wage.
A report commissioned by the minimum wage committee, parts of which have been shared with Manx.News, has laid bare the concerns business leaders have over government policy to settle the minimum wage and living wage next year.
The report by Pragmatix Advisory has recommended that that target be abandoned, saying “harmonisation by spring 2025 is probably too fast”.
Addressing the most vulnerable sectors it said: “These firms often operate on low margins, with limited cash reserves and are indebted. Many of them are already uneconomic and only survive through the willingness of (often local) owners and investors to receive sub-market salaries and returns.
“For some, the higher wage costs is an existential threat – either through involuntary failure or managed exit. Government may wish to consider mitigation measures for higher risk sectors.”
Lowest Earners
While the increase is intended to support the island’s lowest paid, the report said it could have the opposite effect.
The report claims that the poorest families, who depend more on benefits and pensions income, will “see little benefit from higher wages:”.
It said: “Lower-middle income families will gain the most proportionately, although improvements will likely be felt in wealthier homes too.
“A number of stakeholders commented that interventions involving the tax allowance and thresholds regime have the potential to better target specific income cohorts than changes to the minimum wage.”
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