Discussion Document on the Review of Minimum and Living Wage Methodology | June 2025

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18 June 2025

Background

The Isle of Man Chamber of Commerce welcomes the recently published review by the Department for Enterprise and Treasury on the methodology used to set minimum and living wage rates. This follows years of advocacy by Chamber and its members for a more evidence-based and economically sustainable approach to wage-setting.

The review has resulted in eight policy recommendations, which are scheduled for debate in the July 2025 Tynwald sitting. Chamber supports the adoption of these recommendations, which represent a shift towards a more structured, data-led framework. This document provides additional context and detail behind our position.

Summary of Key Recommendations:

Adoption of 66% of Median Earnings as Benchmark

Chamber recognises the move to set the Minimum Wage at 66% of the Island's median hourly earnings as a more pragmatic and structured approach to wage-setting. While this represents a departure from the previous commitment to align with the Living Wage, it offers the potential for a more balanced framework that considers both worker welfare and business sustainability.

However, we remain concerned about the methodology used to calculate median earnings. In particular, Chamber is seeking assurances that the data will be sufficiently granular to distinguish between public and private sector pay levels. Without this distinction, there is a risk that higher public sector earnings could distort the benchmark, inadvertently inflating wage expectations in sectors already facing acute cost pressures.

Clarification of Median Earnings Calculation.

Chamber seeks additional clarity on how median earnings are calculated:

The gap between the Isle of Man’s Minimum Wage and Living Wage has narrowed from £1.60 to £1.49 in the last year.

Are figures based on administrative records or survey data?

How are hours worked derived, especially when tax returns typically do not capture this?

How are part-time, seasonal, and variable-hours roles considered?How frequently will median benchmarks be updated?

Will data be disaggregated between public and private sectors to reflect differing employment conditions?

The Living Wage for 2025/26 is now £13.74 per hour, while the Minimum Wage stands at £12.25 for adults (£9.55 for under-18s).

Using the Department's reported 2024 median hourly earnings of £20.39, the proposed 66% benchmark would set the Minimum Wage at approximately £13.45 per hour, an increase of £1.20 over the current rate.

While this remains below the Living Wage, it offers a predictable and affordable uplift that balances worker needs with business sustainability. The framework is responsive to economic conditions and provides a safeguard against disproportionate cost increases.

Fixed Annual Timetable
The proposed timetable, with proposals in October and implementation in April, will enhance predictability and planning for businesses.
Retention of Two Wage Bands
Chamber supports maintaining a youth rate (£2.70 below adult rate) to foster entry-level employment and support workforce development.
Accommodation Offset and Committee Review
Ongoing assessment of the Accommodation Offset and a review of the Minimum Wage Committee’s statutory role are welcomed to improve fairness and clarity.
Monitoring and Flexibility
Chamber supports the proposal for ongoing monitoring of the policy’s impact and maintaining the flexibility to refine the methodology in response to economic shifts.

Chamber's Position and Call to Action

The Chamber believes the new methodology represents a pragmatic, transparent, and sustainable model for wage-setting. We urge all Members of Tynwald to support the recommendations presented in Government Document 2025/0048.

These changes have been shaped by years of dialogue, data sharing, and collaboration between Chamber and its members, underscoring the importance of stakeholder engagement in effective policymaking.