Treasury Minister Dr Alex Allinson has defended the decision to proceed with the increase the minimum wage by 9.9% this April.
He said the move is essential to ensure people “have money in their pocket” to live on the island.
The increase, set by Tynwald last October, will raise the minimum wage to £13.46 per hour and the youth rate to £10.76.
It follows a commitment to align the rate with 66% of median earnings, diverging from a previous policy to harmonise with the living wage.
Dr Allinson told members: “The fundamental problem is that we have people on the Isle of Man not being paid enough to live on the Isle of Man and raising the minimum wage is an effective mechanism of achieving that, alongside fiscal policies in terms of things like tax thresholds as well to ensure that people have money in their pocket and also ensure that for those people who fall through the cracks, we have an adequate benefit system.”
Impact
In a tense Keys session, Dr Allinson faced repeated questioning over the lack of a recent economic impact assessment.
He cited a 2023 Treasury review and a 2024 independent report, but confirmed no new analysis had been done since the resolution was passed.
“Treasury have not repeated this exercise since October 2025,” he said.
Julie Edge challenged the minister, asking if it was “responsible, or does he think it’s totally irresponsible to not relook at this,” given “significant change and also pressure” from the business sector.
She later pressed him on job losses and reduced hours, stating, “you’ve made a decision on very little data”.
Dr Allinson responded that concerns from businesses were “multifactorial,” citing high inflation, energy costs, and changing consumer behaviour.
He argued the government’s role is now to “construct the right support packages for those local businesses who may be impacted”.
He also repeatedly stated it was not a government decision, but one made by Tynwald as a whole.
Economy
Dr Allinson also faced scrutiny over the island’s unique economic structure.
Chris Thomas questioned whether international evidence was relevant given the island’s large public sector, where median earnings differ significantly from the private sector.
Dr Allinson defended the use of median earnings as “very valid for our small island economy”.
Concerns were also raised that the Isle of Man’s rate will soon exceed those in the UK and Channel Islands.
Rob Callister urged the government to “understand why the Isle of Man is significantly higher as an employer costs.”
Dr Allinson countered that Jersey’s minimum wage is also set to rise and that the “fundamental problem” is “poverty on the Isle of Man”.
Also Read
See our coverage of the minimum wage rise here or on the links below.