Chamber survey highlights business’ concerns about ‘short notice’ for proposed minimum wage increase | February 2022

An Isle of Man Chamber of Commerce survey has highlighted concerns about the speed at which businesses may have to adapt if the adult minimum wage increases in April.

Date: Tuesday 08 February 2022

An Isle of Man Chamber of Commerce survey has highlighted concerns about the speed at which businesses may have to adapt if the adult minimum wage increases in April.

Firms from a wide range of sectors took part in the survey, including finance, manufacturing, retail, tourism, hospitality, agriculture, transport and service industries. The companies ranged from small independent businesses, up to major corporations employing 100+ staff. The survey respondents are a representative sample of Chamber’s membership which, in total, includes businesses that employ 20,000 people (approximately half of the Island’s private sector workforce).

Subject to Tynwald approval this month, Isle of Man Government wants to increase the minimum wage for adults by £1.25 per hour – that would mean employers paying the new adult minimum wage of £9.50 per hour from April 2022.

While Chamber strongly supports a fair, living wage, says Chamber President Kristan McDonald, many members have expressed concerns about plans to introduce the increase so quickly. He said: “From our survey, it’s clear that many feel that they have had very little time to respond to the financial impact this increase will have. It appears likely that it will have a knock-on effect for proportionate wage rises across the board, and that a majority of businesses may have no choice other than to push the 13% rise onto the consumer which, when combined with the other inflationary pressures we are seeing, will discourage spending in the local economy.”

Chamber is also voicing the concerns of its members by calling for the Government’s current Minimum Wage Committee to be replaced by a Domestic Economy Committee with a wider remit. That is part of a broader set of Chamber proposals which, says the organisation, would go a long way to helping businesses and the local economy. Chamber is also calling for:

• Tax incentives for paying higher wage levels.
• Introducing an online levy or tax.
• Providing tax breaks for larger businesses based on the Island. The retail tax would be a good starting point, says Chamber, to mitigate across the board pay rises and maintain equity in pay policy and differentials.
• ‘Tapering’ tax benefits to offset the potential shock of the proposed minimum wage which would be implemented in one go, and at short notice.
• A VAT reduction for the food and drink sector.

“If the proposed minimum wage increase is introduced in April,” added the Chamber President, “a phased implementation would give businesses more time to adapt. With many still recovering from the impact of events over the past two years, tax and NI breaks would also help to support recovery, and reducing VAT to 5% for the food and drink sector would certainly benefit cafes, bars and restaurants that have been hit harder than most businesses during the pandemic.”