Isle of Man First has warned that if the new rate of minimum wage is imposed it will only be a matter of time before irreversible economic decline.
While it supports the ambition to raise living standards for low paid workers, it believes “we must be candid”.
It believes Government will do nothing until it is too late and at that point, the damage cannot be undone.
Loss of Jobs
The group has given a projected timescale of decline if nothing changes and government impose the new wage of £13.46 from April of next year.
It believes that in 12 to 18 months there will be a noticeable increase in insolvencies, closures of well-known hospitality and retail venues, loss of entry-level jobs and youth migration will accelerate.
In 24 to 36 months, it predicts that town-centre vacancy rates exceed 30%, government tax take drops sharply, emergency tax rises introduce and talent and investment begin leaving permanently.
In five years time, it believes the Isle of Man will have a “hollowed-out” economy, tourism will be diminished, private-sector workforce will shrink, public-sector costs absorb the majority of tax revenues and financial sustainability critically impaired.
What Can be Done?
Leader of Isle of Man First, Mitch Sorbiet has proposed the government implement the below, instead of purely raising the rates of minimum wage.
Mitch Sorbie said: “If these interventions are not introduced urgently, the death of the island’s domestic economy is certain.”
| Mechanism Required | Why It Matters | The Consequence If Ignored |
| VAT or targeted tax relief for labour intensive sectors | Allows businesses to absorb wage inflation | More closures in retail and hospitality, fewer visitor facing services, accelerating tourism decline |
| Transitional support to protect jobs during wage uplifts | Spreads cost impact and stabilises employment | Redundancies, reduced hours, and business insolvencies rise sharply |
| Separation of social policy from tax windfalls | Ensures wage boosts actually benefit workers | Treasury continues to profit while struggling households and employers fail |
| Cap or slow the pace of minimum wage rises until private-sector recovery begins | Aligns wage policy to economic reality | Private sector collapses under costs it cannot offset |
| Structural reform of public-sector payroll growth | Restores sustainability and shared responsibility | Taxes rise again as fewer businesses remain to fund expanding Government costs |
