Manx government admits living wage calculation incorrect since 2017

Some employers have paid an overestimated living wage since it was first set in 2017

An error in how the Isle of Man Living Wage was historically calculated means the figure has been overestimated since 2017, the treasury minister has said.

The mix-up meant the figure had been overstated by between 80p and £1.24 each year since its introduction.

Alex Allinson said corrected figures set the voluntary wage rate at £11.05 an hour this year, an 18p rise on 2021.

Dr Allinson said the "regrettable" mistake was found during a detailed review of the calculations used.

A mistake involving the cost of having a child in the family was made when the wage was initially calculated in 2017 as £8.61.

It was replicated in each subsequent years' figures, which many Manx employers adopted to ensure their workers could afford a decent standard of living.

The discovery of the error delayed the publication of the 2022 report by three months while the methodology was corrected before being externally validated by Loughborough University, which will continue to check future calculations.

Alex Allinson said the mistake had now been corrected and externally verified

Dr Allinson said he hoped people would have confidence that "as soon as we spotted this inaccuracy, we have dealt with it".

Steps had been taken to ensure future calculations were correct, he added.

Dr Allinson said businesses who felt "damaged" after overpaying staff should contact the Cabinet Office, which would deal with them on a case-by-case basis.

The latest Living Wage figure was calculated before inflationary pressures started to build, and plans to alter it in the short-term have been ruled out, he said.

The government wanted to maintain confidence that it was a "statistical, not a political" calculation, and other measures were being used to address rises in the cost of living, he added.

Last year Tynwald voted to see the minimum wage, currently set at £9.50 an hour, increase to meet the Living Wage by 2026.