A number of Manx businesses have spoken to Manx.News today about the concerns they have regarding the proposed minimum wage increase.
One business said “it’ll be the straw that breaks the camels back” whilst another said it would have”a very detrimental effect on lots of businesses”.
Next week Tynwald will debate the proposed 9.9% increase on minimum wage.
All four businesses we spoke to all want to pay their workers fairly and well for the work they do, but none can swallow the proposed increase without operational changes.
Fair Pay
One CEO called it “laudable” that government want to increase the living standards of the low paid, and echoed that everyone feels that way but its the “methodology that’s causing us the problem”.
Brett Martin, CEO of the Palace Group called for government to share in the cost of a wage increase.
He said: “The way the system works is, if they went ahead with this increase from 12.25, to 13.46, only 60% of that, that benefit, if you like, goes to the employee.
“40% of it goes to the government in taxes. So businesses shoulder 100% of the cost, and government picks up almost half of the benefit, and that’s shouldn’t be the case.
“And if they want to improve people’s living standards, focus on the people, not the government tax revenues.”
Business Proposal
Brett added: “I think that there’s lots of different ways of doing it.
“Our proposal, effectively is based upon the idea that there’s an increase, let’s say, inflation, or roundabout inflation, that’s borne by the companies, and then the government provides additional personal allowances or higher National Insurance thresholds the low paid so they pay less tax to the government, and in that way, we effectively fund an increase in pay, and we pay more employers national insurance, and the government discounts the personal National Insurance and or tax cost to the individual.”
The businesses proposal is as laid out below:
| Current | Proposal | CPI & higher SPA | |
| Rate per hour | £12.25 | £13.46 | £12.62 |
| Working week | 37.50 | 37.50 | 37.50 |
| SPA | £14,750 | £14,750 | £14,750 |
| Lower pay SPA supplement | £0 | £0 | £7,500 |
| Lower tax threshold | £6,500 | £6,500 | £6,500 |
| Lower NHI threshold | £8,736 | £8,736 | £8,736 |
| Earnings | £23,888 | £26,250 | £24,609 |
| Income tax | -£1,204 | -£1,700 | -£236 |
| Employee NHI | -£1,667 | -£1,926 | -£1,746 |
| Net take home pay | £21,017 | £22,623 | £22,627 |
| Employer NHI | -£1,939 | -£2,242 | -£2,032 |
Not Greedy Business
Several people have called out businesses for standing against the minimum wage increase by calling businesses “greedy”.
But just how true is that? Ollie Neale, Director at H&B Group said: “I think there’s a lot of people starting to sort of see a lot more of what this really is, you know, the sectors that we operate in, we pride ourselves being a part of, you know, heart of the community, and providing a service to the community.
“We just want to make sure we have the most sort of vibrant offer available to the community. If there are restrictions on operating hours, if there are sort of price inflation, sort of that potentially could sort of come through, pull through on the back of this proposed increase, we feel that’s just going to sort of upset and hinder the vibrancies of the community across the Isle of Man.”
Mark Hotchkiss, Company Secretary, Robinsons: “I think the level of the base increase that we’re talking about will move all pay levels within that so the actual impact is multiple times, sort of the headline figure. It’s not just simply on the lower paid workers.”
Hurting The People We’re Trying to Help
Whilst, Andy Gibbs, Chairman, Jaks Group and LVA said: “We’re already looking at cut backs winter hours, because you’ve just not got the volume of people that we used to have years ago.
“You know, the tourism trade is not great. People haven’t got money in their pockets. I mean, obviously, with the minimum wage going up it doesn’t necessarily put it in the person’s pocket.
“It’s basically putting the money into the government’s pocket, which is the wrong thing to do. Basically, what they should do is raise raise the tax thresholds so that people are getting more money in the pay packet.
“And the burden is not just put directly onto the business, because businesses will close, it will have the opposite effect. It will hurt the very people that they say they’re trying to help.”
