Minimum wage rise 'likely to cause redundancies'

A survey by a newly created pressure group has indicated concerns over minimum wage increases

The planned minimum wage rise would likely cause redundancies or operational cutbacks for half of businesses, a survey by a new lobby group had found.

The Local Economy Forum asked 90 Manx firms, which have a combined workforce of 3,800, what affect the hourly rate rise from £12.25 to £13.46 from April would have.

Treasury Minister Alex Allinson previously said new rate, approved by Tynwald last month, struck a balance between "fair wages" and the "financial stability of businesses".

But, the move has been met with backlash from businesses, with 51 out of 90 who attended the forum's latest meeting arguing the measure would increase the risk of of job losses.

The minimum wage rise would also see the youth rate increase by 12.7% from £9.55 to £10.76.

Some 63 of the 90 businesses said they would cutback investment in youth employment, with 14 stating the rise would create a high risk of closure for them.

Those figures compared to 18 and 13 firms if the minimum wage was held at the at its rate.

Pass on increases

Chairman of the newly created forum, Chris Robertshaw, said It was "illogical" that government was "crushing our businesses under an unaffordable minimum wage increase".

He said the planned rise needed to "change quickly if needless business failures and job losses are to be avoided".

The group has proposed the harmonisation of the island's rate with the UK, which currently stands at £12.21, along with tax credits for those low paid to boost the minimum wage to the national living wage, which sits at £13.74.

Secretary of the forum Brett Martin said inflation in recent years had meant that "businesses either absorb the costs through lower margins or pass on the increase and watch their sales volume decline".

However, some workers on the Isle of Man have previously welcomed the 9.9% increase to minimum wage in response to price rises.

The forum said it was set to meet with Treasury Minister Alex Allinson and Enterprise Minister Tim Johnson to discuss the proposals.