Firms relieved after wage alignment plan dropped

The scrapping of plans to align the Isle of Man's minimum wage with its living wage has been welcomed by businesses, who feared the move could have led to job losses and forced firms to close.

The Manx government backtracked on proposals to increase the lower rate up to the £13.05 aspirational wage after alarm was raised by industry.

This could have been "the last straw" for under-pressure sectors of the economy, the Isle of Man's Chamber of Commerce said.

The minimum wage is currently due to rise to £12.25 on 1 April, with no further increases planned for the financial year.

The lobby group, made up of more than 500 businesses, first raised its concerns last month when the Department for Enterprise outlined proposals to align the two wages by October.

The lobby group understood low paid workers were being affected by rising costs, but "felt strongly" that the plans would have hit "businesses in sectors already under pressure", the spokesperson said.

While members welcomed the change, they warned it was "a short-term fix to long-term issues", they said.

The spokesperson said the chamber would "encourage government to give more thought to alternative strategies instead of increasing the minimum wage above the rate of inflation".

An increase in tax thresholds for low paid workers has been suggested by the body to "put more money in people's pockets and reduce the burden on businesses".

Meanwhile a group made up of representatives from the hospitality industry said the government's decision to row back from the plan was "a huge relief" for the sector.

The Hospitality Isle of Man Board said a "detailed review of the wider impact on earnings and wage costs sustainable by businesses must be considered".

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