Several owners have warned their businesses will not survive the government’s proposals to increase the minimum wage.
The proposed Single Hourly Rate will increase to £13.46 wile the Youth Rate would also increase to £10.76.
Businesses are warning that the proposed rates will mean more business closures, less jobs and higher prices.
Destroy Small Businesses
One small business owner told Manx.News that they are on “the verge of considering selling up, especially now as this wage increase will destroy small businesses”.
They said: “If I am paying minimum wage of over £13ph to an unskilled worker, then I will have to be paying my skilled workers like the chefs and baristas a wage of about £16/17ph which then means increasing my prices, which puts customers off coming in as prices are too high.”
They added: “It will also result in small places like me reducing staff hours and jobs as we can’t afford to be paying such high wages.”
This business called for government to change the tax and national insurance threshold.
Costs Go Up
A bar in Douglas said that “another near 10% jump in minimum wage will hit the very businesses that keep our High Street alive”.
Henderson and Glass said: “Costs go up, but footfall doesn’t, people just buy less. That means more price rises for bars, cafés, and restaurants and shops already on the brink, or more shutters coming down.
“Walk through our towns and it’s coffee shops, charity shops, and a handful of independents fighting for fewer customers. Pile more cost on, and you don’t help workers you accelerate closures.”
More Businesses Disappear
It added: “Many others, including ourselves, have had to cut back opening days because quieter weekdays simply aren’t viable anymore.
“That’s the pressure on hospitality and retail right now. Another wage hike without real support like parking solutions, events to drive footfall, rates relief, VAT changes or proper business backing will only mean more reduced hours, more closures, and fewer reasons for people to come into town.”
Adrian Christian of Riverside Ltd, who operates The Sound Cafe, Aqua Cafe, Bradda Glen Cafe, Cregneash Cafe and Stanley’s Restaurant, told Manx.News:
“I fully support fair pay and am proud to employ staff at competitive rates — but this proposal risks pushing many small businesses past breaking point.”
The Real Picture
Mr Christian painted “the real picture” for what the increase would look like for his business:
- £13.46/hr = £26,247 per year base pay
- Add 20 days paid holiday + employer NI and the actual cost rises to ~£30,700 per employee
- For a 10-person team, that’s £307,000 per year in wages alone before rent, utilities, stock, or VAT
He said: “Combined with the Isle of Man’s 20% VAT rate — one of the highest burdens in Europe — this will mean higher prices for customers, fewer hours for staff, and in some cases closures.”
Christian wants our government to look at other countries that are taking a different approach:
- Ireland is cutting hospitality VAT back to 9% from July 2026 after a 7.6% drop in sales when VAT went back to 13.5%.
- Germany is reintroducing a 7% VAT rate for restaurants/catering from January 2026.
- Sweden is temporarily cutting food VAT from 12% to 6% to keep costs down during inflation.
How to Help Businesses
Mr Christain calls for a balanced approach to keep cafés, restaurants, and pubs open — and protect the jobs they create.
He wants to see an inflation-only increase (2–3%) this year, phased rises in future with proper consultation and targeted NI relief and VAT reduction for hospitality.
He says that “without these steps, we risk turning a wage rise into an inflation spiral that makes life more expensive for everyone while reducing choice on the high street.”
If you want to give your perspective on the proposals of a minimum wage increase email newsdesk@manx.news
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