Submission to the Minimum wage committee

Recent submission to the minimum wage committee. 

14th December 2023

Dear Miss Weadock

The following sets out the views and representations of members and the wider business

community across all sectors but in particular, retail, hospitality sectors (hospitality covering visitor

accommodation, food & beverage), care, manufacturing and engineering. Combined, these sectors

employ several thousand personnel, with an above average preponderance of lower-skilled, casual,

shift workers and/or younger employees who are contracted at (or close to) the current minimum

wage levels.

There is great concern around current economic circumstances and the effect that another increase

in minimum wage will have on local businesses that are already under great strain of the cost of

doing business. We far that another increase could lead to employers making redundancies or

scaling back hours and spark wage disparity.

We are aware that the setting of minimum wage is now effectively determined by the government’s

policy of moving to living wage by 2025, but to repeat what we expressed last year, we fear that

moving too fast will have the opposite effect to that intended, with businesses folding and lower-

paid staff losing their jobs rather than seeing an improvement in their living standards.

Chamber undertook a survey of it’s members asking them to give their views on a rise in minimum

wage and the harmonisation of minimum wage to living wage. The underling message is clear – that

this will impact the majority of businesses and is no longer just related to the usual hospitality /

retail sectors. We are seeing messages from businesses saying they may have to relocate and/or

increase prices. Another increase reduce the gap between skilled and unskilled labour. Another

point to consider is a rise in minimum wage will eliminate the lower pay scales within Government,

including bands 1 and 2, and possibly affecting some within band 3.

Chamber believes that government should:

1. 2. Sow down the speed of transition on a decision that predates the economic shocks that have

impacted the Island over the last few years

Undertake a full economic impact assessment. In our submission last year and further

correspondence with the Treasury Minister, Chamber asked for Government to ‘ consider taking

external, macro-economic advice on the approach to the living wage transition. The economic

dynamics currently at play are complex, and it must surely make sense to get the right advice to

1st Floor, Hilary House, Prospect Hill, Douglas, Isle of Man, IM1 1EQ

Telephone +44(0) 07624 462550 www.iomchamber.org.im

Company Limited by Guarantee no. 1380C. Registered in the Isle of Manensure the transition from minimum to living wage is handled in a way that optimises the

eventual outcome for government, workers, and employers’.

A report has been published https://www.gov.im/media/1380823/economic-impact-min-living-

wage-sep-2023-report-201023.pdf , however, it does not address the economic impact

3. assessment of harmonising the two levels (min and living) in 2025 and predictions of jobs lost

and businesses closing.

On page 15 it states: “Ultimately, the level of this risk in terms of likely business failures is

unknown, especially in the context of numerous compounding economic pressures over the past

few years including the COVID pandemic and inflationary situation.” This is what Chamber

would like to see modelled, to offer insight into the likely number of business closures.

Provide financial support to underpin the transition - If government is determined to stick with

the 2025 timetable, it needs to provide financial support to the worst-affected parts of the local

economy. Some form of tapered relief needs to be put in place to cushion what is going to be a

major blow to many. Without it, the risk of business failures over the coming few years, when

inflation and /or recession will be endemic, is alarmingly high.

Yours faithfully

Rebecca George

Chief Executive

Sent for and on behalf of the members of the Chamber of Commerce

Cc’d: Treasury Minister, DfE Minister, Chamber Board, Chamber Sector Leads