Chamber of Commerce has warned that a proposed 9.9% minimum wage increase will have severe consequences for the local economy.
Nearly half of over 100 businesses which responded to a snap survey said they expect a significant impact.
The poll of business owners found that 13.3% see a risk of downsizing or closure as a direct result of the rise with 35% of firms planning to raise prices and 21.2% saying they will reduce staff numbers.
The Chamber stated that the pressure is spread across the economy, but will be felt most by small firms that form the “backbone of the island’s economy.”
Stalled Growth
It warned that the scale of the increase risks “higher prices for consumers, fewer jobs, and stalled growth”.
A statement said: “Chamber supports fair pay. But a jump of this scale risks putting employers under unbearable strain. The reality is higher prices for consumers, fewer jobs, and stalled growth.
“While some argue that higher wages could give workers more disposable income, Chamber warns that this effect is quickly cancelled out if businesses are forced to raise prices or cut jobs to cope.
“In net terms, workers can end up no better off, and in some cases worse off.”
It argues that the most effective way to improve living standards is to tackle the island’s high-cost base, rather than implementing large wage increases that businesses “simply cannot meet”.
And added: “The call for better data and independent expertise is urgent.
“GDP fell by 5% in 2022/23, but no new figures have been published since. Median earnings have stagnated since 2009, while typical households face higher-than-average inflation due to rising food, energy, and housing costs.”