Manx.News has spoken to former Treasury minister Eddie Teare who felt that the government should “scrap” the proposals as they’re a “step too far”.
In July this year, Tynwald approved a new method of calculation, tying the minimum wage to 66% of median earnings.
Once implemented, it will be a statutory requirement, meaning all employers must pay at least the new minimum wage to employees working on the island.
Many have called for an increase in personal allowance thresholds instead of an increase in minimum wage.
Mr Teare backed this and questioned as to the Isle of Man government doesn’t follow Jersey’s steps of increasing thresholds to £20,000 instead of £14,500.
Misjudged
Mr Teare told Manx.News that he thinks the proposals are “misjudged”.
He said: “They’re going to throw the pebble in the pond, and I don’t think that they’ve anticipated with respect, what the ripple is going to do now, the first thing is, it’s inflationary.
“The second thing is, it’s going to cause increases elsewhere, because people who are earning just above the minimum wage will be looking for the differentials to be maintained. So they’ll be looking for more pay as well.
“And the other thing is now the elephant in the room is that they’re going to be faced with a difficult position when they’re negotiating with the trade unions on pay right across the public sector, because on one hand, they’re saying a section of the community needs a pay rise of 9.9% and on the other side, they’re telling the unions that you can’t have anything like that.
“And the unions have rejected the offer they’re put in. So one is going to, in effect, laugh at the other.”
Bottle Fog
When asked if there were other options to increase earnings, without putting jobs at risk by increasing the minimum wage, Mr Teare said: “In effect, it’s like trying to bottle fog, isn’t it?
“You’re just chasing around. So in effect, the headline rate has gone up, but they’ll be getting less hours, and they’ll be having less cash in their pocket.
“But the other thing we got to be very careful about now too is the rise of AI, Artificial Intelligence. Now, once you drive up costs to employ people, the incentive for employers is to have a look at how do we do without them, putting it politely, so can we automate those jobs? Can we use AI in effect? Do we need those jobs?
“So the biggest danger is that we will see a reduction in low level jobs. Now, you need those low level jobs so young people can get or some young people can get into the workplace. Now, employers tend to look for people who’ve got a bit of experience.
“Now you’ve got to give people the opportunity to start work. So then carry on. And unless we actually have an environment where those entry level jobs are freely available, we’re going to have a problem.”
