Chamber's Reaction Toward Minimum Wage Increase | Oct 2025
24 October 2025
The Chamber of Commerce is deeply disappointed by the decision to proceed with a 9.9% minimum wage increase, despite repeated warnings from employers across the Island.
Even the Treasury Minister has acknowledged that this decision will create challenges for some small businesses, a point Chamber and its members have raised for many months. Since Covid, the minimum wage has risen by 48%, even before this latest increase. In the same period:
· Inflation has increased by 24%
· Personal allowances have gone up by just 3.5%
· The 10% tax band has not changed
· The higher rate has increased from 20% to 21%
This means the tax system is being leveraged to increase the effective rate of tax paid by employed persons (up by approximately 20% in four years) at the expense of both businesses and individuals. If Government truly wanted to support low-paid employees, it could have done so by increasing tax allowances or reducing National Insurance. Instead, it has chosen a policy that risks jobs, investment, and training in order to generate more tax revenue. This would be concerning at any time, but it is especially serious now when some businesses are closing and jobs are being lost.
The wider response has been equally critical. Many see the policy as poorly planned, economically damaging, and likely to make life more expensive for everyone, as many small businesses will have no choice but to pass on higher costs to consumers. A common view is that employees on the minimum wage may think they are earning more, but rising taxes and living costs mean they are still losing out. The only real winner is Government, through higher Treasury revenues.
Our members are already expressing frustration that their concerns were ignored. While some may survive the short-term impact before the increase takes effect, Chamber is deeply concerned that the true fallout will be felt next winter, when rising costs and depleted reserves may make survival impossible for many.
Looking ahead
In recent months, more small independent businesses have shut their doors, and job cuts have been announced. Looking ahead, the approval of the minimum wage increase risks accelerating that trend leading to further closures, job losses, and automation, with younger and less-experienced workers likely to be hardest hit.
While we have welcomed Tynwald’s approval of a new methodology linking the minimum wage to median earnings which was announced a few months ago, we continue to call for reform of the wage-setting framework with a focus on the impact of the widening public/private sector pay divide. We have consistently highlighted the risks of pursuing a social policy that worsens the 28% pay gap between the public and private sectors. Our position on that issue was explained in our July media statement and it has not changed.
Political criticism of Chamber
During the Tynwald debate we were disappointed to hear so many politicians openly criticise Chamber in Tynwald simply for doing what we exist to do: representing over 450 Island businesses that employ more than 20,000 people. Chamber’s role is to speak up for the private sector that funds public services, supports employment, and underpins the Island’s economy - and that’s what we will continue to do.
Chamber will continue to stand up for the employers and employees who are vital to keep the Island’s economy running and growing. However, more work is clearly needed to ensure that all politicians and decision-makers understand that a healthy private sector underpins a strong economy and generates the funds required to pay for public services
Media contact For further enquiries, please contact MMC by emailing richard@mmc.co.im