The minimum wage will rise to £12.86 per hour for workers aged 18 and over from April 1, after Tynwald approved the increase in this month’s sitting.
The 5% uplift, moved by Enterprise Minister Tim Johnston, represents a reduction from the £13.46 rate previously agreed by the court in October last year. The youth rate for those under 18 will increase to £10.16 per hour.
However, this has led to the total abandonment of the method Tynwald backed to set the minimum wage only last year.
“This is obviously very different approach to what Tynwald has approved multiple times over the years,” said Lawrie Hooper, questioning whether the previous plan to link the minimum wage to 66% of median earnings had now been abandoned.
Dr Alex Allinson said the orders before members “actually renege on the decision made in October last year by this honourable court” and reduce the rate workers had been expecting.
Dr Michelle Haywood addressed low-paid workers directly: “I am really sorry to those workers who planned their household budgets and their lives on the understanding that the original commitments made by this court would be honoured. I am ashamed that I did not manage to help deliver that.”
Future approach
Mr Johnston confirmed the island would now return to its previous system of setting the rate annually.
“We now revert back to a system that’s been in place for many years and has served us well,” he said. “The existing framework that we have in place today with the minimum wage committee has delivered over 60% increase in the minimum wage since 2021.”
However…
In July last year, Mr Johnston backed moving away from this method, telling Tynwald: “I believe a change in this policy to a median earnings calculation strikes the balance here, offering a wage aligned to the broader economic conditions for our lowest paid workers, while giving clarity and certainty of methodology and scheduling to our local businesses.”
Back to today:
Speaking in Tynwald, Chief Minister Alf Cannan cautioned against a “fixed mindset”, noting UK youth unemployment at 16.1% and that a Bank of England policymaker “has partially blamed the minimum wage rises and the rate of increase for attribute to contributing towards that”.
Committee governance questions
Gary Clueit MLC raised concerns about the operation and membership of the Minimum Wage Committee, which advises the minister on rate changes.
“For one, though they do occasionally issue public reports, finding minutes on their deliberations appears high on impossible,” he said.
Mr Clueit asked whether one committee member remained in contravention of the Minimum Wage Act 2001, which disqualifies anyone elected to a local authority.
The member in question was elected to Castletown Commissioners in April last year.
Paul Craine MLC followed up: “If there was a disqualified person at the meeting, did that person count to make the meeting quorate? Was their presence significant?”
Attorney General’s response
Attorney General Walter Wannenburgh told members: “Without doubt, it is right to say that the act serves to disqualify any member of the minimum wage committee who is thereafter elected to either of our branches, a statutory board or any local authority.”
He confirmed he would examine the facts and provide a fuller written response, adding that if the member’s membership “has been crucial in the making of a decision, as opposed to a decision which is made unanimously, then there could well be implications.”
Lawrie Hooper later highlighted that committee regulations require members to serve three-year terms, questioning why some members appeared to have served since 2002.
Mr Johnston responded that under the 2002 regulations, “a member of the minimum wage committee continues to hold that membership until the successor is appointed.”
Both minimum wage orders were carried, with the adult rate receiving 23 votes for and one against in the Keys, and six for and one against in the Legislative Council.
Also Read
You can read our extensive coverage of the minimum wage rise here.