Tynwald will be asked to approve increases to the minimum wage at the February sitting which, if approved, will see the rate achieve parity with the current living wage during 2025.
This move is in accordance with the current Tynwald policy position of achieving parity within five years.
The new rates, proposed by both the Department for Enterprise and Treasury, will see the island’s single hourly rate initially increase from £11.45 to £12.25 per hour from April 1, with a further increase to £13.05 per hour from October 1.
The youth rate, for those over compulsory school leaving age but not yet 18, will increase from £8.75 to £9.55 from April 1, increasing up to £10.35 per hour from October 1.
With the phasing in of the proposed increases, the government is seeking 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 and follows concerns expressed by the Minimum Wage Committee on a single increase in April 2025”.
However, if the living wage was to rise above this level, there is no guarantee that the minimum wage, which is controlled through a statutory process, would rise in line with this.
Pragmatic
Enterprise Minister Tim Johnston said: “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.
“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.”
Treasury Minister Dr Alex Allinson added: “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.”
Requirements
The DfE and Treasury have also agreed 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 government says that “currently the island is unique in the way it calculates the living wage based on a basket of goods approach, with other comparable jurisdictions all taking an approach pegged to median wages”.
The two sets of proposed increases will be brought forward to Tynwald at the February 2025 sitting and, subject to approval, the first round of increases will be effective from April 1 2025.
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