The Chamber of Commerce says businesses have major concerns about the short and long-term economic impacts of proposals to harmonise living wage and minimum wage rates.
It is government policy to align the two by April, which would see the minimum wage jump from £11.45 an hour to £13.05.
A report commissioned by the Minimum Wage Committee revealed that plans to increase the minimum wage to £13.73 in April 2025 (which is the anticipated living wage for next year) could cost private and third sector businesses up to £188million.
The issue is, while people understandably want to be paid more, Chamber said its members think it is not in the island’s long-term economic interests and could lead to more redundancies and business closures.
CEO Rebecca George said: “Chamber appreciates the good motives behind Tynwald and Isle of Man Government’s commitment to transition to the minimum wage by April 2025, but there are still widespread concerns in the business community.
“While the objective of harmonising the minimum wage with the living wage aligns with broader social policies Chamber, acting on behalf of the business community, has major concerns regarding the proposed timeline and its potential economic ramifications. Increasing the minimum wage hourly rate to £13.73 in April 2025 would represent an increase of 28% when compared to the 2023 rate of £10.75.
“The proposed increase is approximately 14 times greater than the current inflation rate which is around 2%.
“The living wage increases are also above the inflation rate, and the combined effects of these disparities will make IOM businesses less competitive.
“But businesses are also concerned about the speed at which the new minimum wage rate is being introduced and the difficulties it creates in terms of employers maintaining financial sustainability.”
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