Tynwald backs new way of calculating minimum wage

The minimum wage will be based on on 66% of median earnings

Manx politicians have approved a proposal to base the Isle of Man's minimum wage off a percentage of median earnings instead of aligning it with the living wage.

Tynwald debated a recently published review into the methodology of how the rate is set and approved that the figure would be based on 66% of median earnings.

It means that a previous resolution to align the minimum wage with the living wage would be overhauled.

The change would see the current hourly minimum wage rate of £12.25 increased to £13.46 in April, a slightly lower rate than the living wage which stands at £13.74.

The minimum wage in the UK is currently £12.21 an hour.

Proposals put forward by SHK Juan Watterson to instead calculate the rate based on minimum income standards were rejected.

The rate had previously been set out in regulations made by the Department for Enterprise and Treasury after consulting with the Minimum Wage Committee.

'Strike a balance'

Considerations that had been part of the rate-setting had included the effect on employment, inflation, competitiveness of businesses and the costs of industry.

However, concerns were raised that the new methodology would not link the rate with the cost of living for workers, and that earnings were more stagnant.

MHK Joney Faragher argued the new method "risks leaving some people behind".

"It is about real people and whether someone can afford to live independently," she said.

Treasury Minister Alex Allinson said the new methodology would provide a "sense of certainty" for the minimum wage year-on-year for businesses.

Watterson argued that a greater proportion of high earners on the island could skew the minimum wage if it was based on a percentage of median wages, but Enterprise Minister Tim Johnston said it would reflect higher living costs.

Johnston said the approach would remove ongoing subjectivity while maintaining competitiveness for the island's workers and businesses.

The economic impact of previous plans to assimilate the minimum wage with the living wage "could not be ignored", he said, and the change "strikes a balance" offering a wage aligned to the broader working population while giving businesses clarity.

Tynwald backed that a review into the policy would be conducted by the end of December.