The minimum wage could increase twice this year to bring it up to the level of the island’s living wage.

Tynwald will be asked to back the move at its sitting next month.

But the Enterprise Minister has acknowledged that the increases may cause concern particularly to small businesses already having to deal with challenging economic times - and this was why the rise was coming in two steps to give firms time to prepare.

The Chamber of Commerce had expressed alarm about the speed at which the new minimum wage rate was being introduced and the minimum wage committee had also warned against a single increase in April.

Enterprise Minister Tim Johnston described it as a ‘pragmatic’ proposal.

He said: ‘In July 2021, Tynwald resolved that the minimum wage should reach parity with the living wage within five years. The current administration set the ambition of delivering on this Tynwald resolution by April 2025.

‘We recognise that many businesses are navigating significant challenges and that these proposed increases may cause concern and have an impact on businesses, particularly small businesses, in our domestic economy.

‘The hope is that the two-step increase will allow them more time to prepare and will also help those in our domestic economy trade through a valuable TT period before further wage increases arise.’

He pointed out that his department offers a range of support schemes for local businesses, including funding, training, and advisory services.

Treasury Minister Dr Alex Allinson said: ‘When Tynwald first resolved to deliver parity between the minimum and living wage rates, clearly no one was aware of the significant challenges businesses would face, including the increased inflationary pressures driven by external events in recent years.

‘It is imperative however, that in order to move forward, we strike a balance between meeting the needs of our community and prioritising fair wages, whilst also supporting the financial stability of businesses.

‘I believe that the proposals deliver this balanced approach and would echo the comments of the Minister for Enterprise in encouraging businesses to explore the range of potential support available to them, should they have any concerns.’

The Department and Treasury have also agreed to undertake a review of the current process for determining minimum wage proposals.

A consultants report last year estimated that harmonising the minimum and living wages at a rate of £13.73m this year could cost private and third sector businesses up to £188m in the first year alone.