Bid to increase minimum wage by 7% approved

The minimum wage is set to increase by 7% in April

Tynwald members have backed a move to increase the minimum wage by 7% in April.

The move will see the hourly rate increase from £11.45 to £12.25, while the youth rate will increase from £8.75 to £9.55 from 1 April.

Proposals for a second increase in October to align the minimum wage with the living wage of £13.05 were put on hold last month after concerns were raised by businesses.

During the sitting, a bid for those initial proposals to be reinstated for both the hourly rate and the youth rate was put forward by MHK Lawrie Hooper but that was rejected by Tynwald members.

Hooper said the two-step proposed increase would provide certainty for businesses and questioned what had changed for the government to "suddenly decide to do a U-turn".

'Higher costs'

Enterprise Minister Tim Johnston, who had brought forward the proposals, said during this administration there had been a 48% increase overall to the minimum wage which had shown a commitment to achieving parity.

He said on balance, after listening to businesses, groups and MHKs, it was the "right thing to do" to change the proposals.

Joney Faragher MHK said that the government had been lobbied "really hard" by businesses, but those on minimum wage were "too busy" working.

She said a low wage economy led to a loss of talent, greater spending on healthcare, more benefits and a strain on the criminal justice system.

But Kate Lord-Brennan MHK said following the initial proposals businesses had indicated they were going to have to close or lose staff due to the increased costs.

Meanwhile, Rob Callister MHK said that costs on the island were higher than in many parts of the UK, but trying to align the two figures by spring 2025 was "far too ambitious" due to the impact it would have on small businesses.

He said increasing the minimum wage to align with the living wage should be delayed until Spring 2026.

Johnston said workers would receive the same increase that had been planned for April while providing the opportunity to review the current approach, he added.

"I am committed to concluding the review into how future minimum wage proposals are brought forward by no later than July this year", he said.