Minimum wage rise 'risks businesses and job cuts'

Proposed changes would see a 9.9% increase in the hourly rate

A business lobby group has said a proposed 9.9% Manx minimum wage rise posed "a serious risk of more business closures and job losses".

Last week, the government announced proposals to increase the hourly rate from £12.25 to £13.46 from April.

The Isle of Man Chamber of Commerce said 87 out of 100 of its members who responded to a survey on the rise had said it would impact their business, with 13% warning of a risk of downsizing or closure.

Treasury Minister Alex Allinson has previously said the new rate "strikes the right balance" by "prioritising fair wages for those on low pay", and the "financial stability of businesses".

The proposals would also see the youth rate increase by 12.7%, from £9.55 to £10.76.

The chamber said while it supported fair pay, it was "deeply concerned" about the three-times-the-rate-of-inflation rise, with the hospitality, retail and care sectors likely to be hit hardest.

Some 35% of businesses said it would mean price rises for customers, with only 16% able to absorb the rise.

The survey also revealed 21% of firms would cut staff numbers, 8% would freeze recruitment, and 3% would reduce staff hours as a result.

Self-employed Jessica Ball says she often takes home less than the minimum wage

The proposed rise follows Tynwald's approval of basing the rate on 66% of median earnings in July.

The chamber says that calculation "masks the growing disparity" between private and public sector wages and created "unrealistic and unsustainable" reference points.

Without support for firms most affected, there was a "serious risk" of staff redundancies and business closures, it said.

Jack McMullaugh says he supports the rise for workers on the minimum wage

The proposed rise is something that has divided opinion among people on the island.

Jessica Ball, who co-owns a haberdashery and soft furnishings company, said while she understood the need for pay to match rising costs, the higher rate would prevent her from taking on an employee in future.

"I am self-employed, so I get what is left and a lot of the time it is massively under the minimum wage," she said.

Jack McMullaugh said it was a "good" move because "if everything is going up then the minimum wage should also go up".

The cost of rents and rates for high street firms were more of an issue than "someone being paid more", he added.

Dennis Edwards says the increased costs will be passed on to the public

Dennis Edwards, who is retired, said the wage rise would see firms "put the prices of goods up to pay for it".

"People who are not on minimum wage, like pensioners, will have to pay for it without having any rise themselves," he said.

The proposed changes are set to go before Tynwald next month.