Wage hike decision 'actively damaging' economy

Campaign groups who protect the interests of Manx businesses and those who work for them have criticised the planned minimum wage rise - with one arguing the government was "actively damaging" the island's economy.

The rate is set to rise by 9.9% to £13.46 an hour in April - something Julie Edge MHK will attempt to have phased in instead.

The Local Economy Forum (LEF), led by business leaders, has called for the rate to be aligned to the UK, while the the Chamber of Commerce pointed to a "lack of recent data" over the impact of any minimum wage reform.

The Treasury said it recognised the pressures facing firms and was developing a scheme to assist employers.

Edge's motion, which will be debated in Tynwald next week, would see the rise staggered over April and November.

Since being proposed in October 2025, the 9.9% rise has divided opinion on the island.

Some workers agreed it was needed to combat rising prices, but employers have warned it could lead to reduced staff hours or the increase being passed on to customers in some sectors.

The latest planned rise in the minimum wage on the island follows a previous hike in February 2025 - which saw it rise to £12.25.

The 9.9% rise is based on 66% of the median earnings recorded in the Isle of Man Earnings Survey Report 2025.

That basis for calculating the rise was agreed by Tynwald members in July 2025 as an alternative to a previous pledge to bring the minimum and living wage rates together by 2026.

In December, the Chamber of Commerce, which represents the interests of 450 businesses, penned an open letter to Tynwald - urging members to adopt an interim rise of wages in line with the island's inflation.

Since then, the pressure group has said businesses now operate "under sustained cost pressure" many of which were already "reviewing staffing levels, hours and future investment".

In its latest plea, it has urged the government to ensure the increased rate of minimum wage reflects "economic reality and protects employment".

The LEF have criticised the government handling and dialogue surrounding the issue, adding their representatives held "totally unproductive" meetings with members of the Treasury and Department for Enterprise (DfE).

LEF secretary Brett Martin said the island's economy was under "significant recession", having "shrunk 11% since the pandemic".

"For some strange reason, government seems to think that the way out of this is to carry on growing the public sector, impose unrealistic costs on business and increase the taxes on the lower paid," he added.

The island's Licensed Victuallers Association (LVA), which serves the interests of licensed premises on the island, said its members were feeling the grip of "rising costs and a prolonged lack of meaningful engagement with industry".

While reaffirming support for fair pay and good employment practices, the LVA stressed that wage policy must be informed by meaningful dialogue with employers.

"Without proper consultation and impact assessment, well-intentioned decisions risk accelerating business closures, reducing employment opportunities, and hollowing out our town centres," the body added.

In response, a Treasury spokesman said the government recognised the pressure businesses were feeling ahead of April.

"Current economic challenges come on the background of inflationary pressures, increases in energy prices, and changes in consumer confidence and behaviours," he said.

"The ongoing dialogue with a wide range of businesses and sector representatives is both appreciated and valued."

The government was committed to developing a scheme to assist employers in the new way in which minimum wages are calculated, he said, as set out in July last year.

Both it and DfE were expected to announce details of an "economic stimulus package" to address concerns at next week's Tynwald sitting, he added.

Read more stories from the Isle of Man on the BBC, watch BBC North West Tonight on BBC iPlayer and follow BBC Isle of Man on Facebook and X.