The Minimum Wage Committee has recommended against any increases to the minimum wage before April 2025.
Its recommendation follows a 6% interim increase implemented in July 2024.
It finds that minimum wage is going in the “right direction but too fast for today’s economy”.
Strain on Local Economy
Pragmatix Advisory has been commissioned by the committee to advise on the potential socio-economic impact of increasing the minimum wage from its current rate of £10.75 per hour to the living wage by the spring of 2025, which is assumed to be £13.73.
The advisors have presented the committee with several recommendations and key findings:
- Households will benefit from a modest increase in earnings and marginal improvement in spending power, although some, especially in more vulnerable roles, will suffer reduced working-hours or lose their jobs.
- The short-term impact of the minimum wage increase on the island’s economy as a whole will likely be limited – and, depending on various factors, could be marginally positive or negative.
- Businesses in certain ‘higher risk’ sectors – such as nurseries, care homes, hotels, restaurants and retail – face potentially substantial detriment from the proposed increase in the minimum wage.
- The government itself will likely benefit through higher revenues from an increased minimum wage.
The advisors full report can be found here.
Minimum Wage Increases
Tim Johnston MHK, Minister for Enterprise said: “There is a target outlined in the Island Plan to achieve parity with the Living Wage by April 2025, building on the Tynwald resolution following the recommendations of the Select Committee into Poverty in 2021.
“The report raises important points for consideration and we will be discussing the implications of the report and recommendation over the next few weeks before considering next steps.”
Johnston says that he and Allinson “acknowledge that many households and businesses are navigating significant challenges”, but its essential “to recognise that these difficulties can compound and strain budgets”.
He says it is “crucial” that any proposed changes strike a careful balance which meets the needs of the community whilst also supporting the financial stability of businesses.
“We respect the work of the independent Minimum Wage Committee and will carefully consider how to proceed given their recommendation. I will provide a further update to Tynwald in November,” Johnston said.
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