Tynwald pulls back April's minimum wage rise to 5%

The increase in the Isle of Man minimum wage is set to be cut by almost half.

It will now go up by 5%, instead of the previously planned 9.9%, after a lengthy Tynwald debate.

The level of uplift has been criticised in recent months and high on the political agenda in recent days, a key reason behind a shock ministerial reshuffle on Monday.

New Treasury Minister Chris Thomas replaced Alex Allinson, with a pledge to take a "slower approach" to raising minimum hourly salaries.

Bringing forward the motion to reduce the minimum to £12.86 an hour instead of £13.46, Julie Edge said it was a "clear, practical, common sense approach".

The hourly wage for over-18s will now go from £11.45 to £12.86 from 1 April - the youth rate will go to £10.16 an hour, both of which more closely align with the UK.

The decision to move the island's minimum wage in line with the living wage was first cemented in 2021.

In the final Tynwald sitting of the last administration, members approved the move to give parity to the two minimums by 2025, one of 15 recommendations made by a select committee on poverty.

But Edge said there was "a red flag risk to our island" and increases in wages had to be reached "responsibly, with evidence-based policy", which "we do not have".

There had been "warnings from our business representative groups" about the rate of inflation and how it could "cause real contraction in employment", she said.

In what became a more than two-hour debate, Edge said it was parliament's job "to manage that risk whilst considering the original intentions of the increase of 9.9%, but not in an election year to just meet personal goals".

The Onchan member added: "Caring about low paid workers includes caring about whether they still have a job."

And she said the 5% rise was a "safety net" in place for businesses before the full budget was announced.

The chief minister amended the motion that agreed with Edge's proposal to raise the rate by 5% in April, but took away any future commitment for a further uplift later in the year.

He first called for the reduction in the wage uplift following his cabinet reshuffle, where he also pledged to "significantly increase" personal allowances to offset it.

He said original 9.9% hike would have meant that businesses had increased the minimum wage by more than 60% in less than five years from the minimum hourly wage of £8.25 in 2021.

Cannan said: "How much more do you think businesses can take, how much can the economy take? Not much."

A number of members had criticised the chief minister supporting the wage rise until now.

But Cannan said: "I may have had to be silent in here, but I haven't been silent on the street."

The amendment "tells business that we are listening to their concerns and we are willing to stand up for them and to protect jobs".

But Ramsey MHK Lawrie Hooper said increasing the personal tax allowance to offset the wage cut would "write off" the four thousand people earning less than £15,000 a year.

He said higher paid earners, such as himself and his peers, would get a "tax break" from the proposals, while 20% of the island's workforce earning less than the minimum wage "will lose out".

"That is sickening," he added.

Fellow Ramsey member and former Treasury Minister Alex Allinson said: "The motion in front of us doesn't slow things down, it completely reverses things."

He added that it was "abandoning commitments of the poverty committee" and "completely abandons the new methodology that was brought to this court in July," adding: "It leaves us with nothing."

But Glenfaba and Peel member Kate Lord-Brennan said minimum wages had risen substantially since 2021, and that was "fantastic".

The motion responded directly to businesses concerned how a further wage rise could affect their ability to keep staff on, she added.

Chris Thomas said that in his first few days as Treasury minister he had been collating numbers about those affected, but he would not "compromise the law by revealing what's in the budget before we get to February".

The amended motion was voted through, with six MHKs and two members of legislative council voting against it.

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