Call for minimum wage approach overhaul rejected

The Isle of Man's minimum wage is due to rise by 9.9% to £13.46 from April

A call to lower the Isle of Man's minimum wage to that of the UK and provide tax credits for the lowest paid workers has been rejected by the treasury minister.

Politicians last month backed a 9.9% rise, with the minimum wage going from £12.25 per hour to £13.46 from April.

But the planned increase has been met with concern from many businesses, with a newly created pressure group - the Local Economy Forum - putting forward the alternative proposals to alleviate the impact on firms.

Dismissing that idea in the House of Keys, Alex Allinson described proposals as "problematic", arguing that tying the Manx rate to the UK's rate of £12.21 would distort the island's labour market.

He said it would mean that some salaries would be determined by UK earnings rather than the economic situation on the island.

It would also risk incentivising businesses to pay lower wages, Allinson said, "knowing that the government would be topping up the difference".

The proposal would be "problematic to implement" since employers did not currently report workers' hours per wage rate, he said.

Alex Allinson told MHKs a proposal to align the island's minimum wage with the UK were "problematic"

However, Allinson conceded that "a diverse amount of challenges" had been raised by businesses across a number of sectors regarding the planned minimum wage rise.

Those had been recognised by the Treasury and the Department for Enterprise, he added.

Local Economy Forum chairman Chris Robertshaw previously said that the National Insurance and personal income tax allowance thresholds had not kept up with inflation in recent years, which had "hit the lowest paid the hardest".

The cost to government of implementing the forum's proposals would be "modest" and should be recovered by higher levels of economic activity on the part of both small and medium-sized businesses and their lower-paid employees, he said.

Both the Treasury and the Department for Enterprise have agreed to meet with some members of the forum to further discuss their concerns.