There should be no further increase in the island’s minimum wage this year as it risks jeopardising the viability of businesses, an independent committee has recommended.

It will mean that an interim increase of 6% implemented in July this year, will stand - and will potentially delay government plans to align the minimum wage and living wage by April 2025.

This follows a report which suggested plans to raise the minimum wage to the level of the living wage could cost private businesses £188m - and lead to some cutting jobs, reducing hours or even going to the wall.

The Department for Enterprise said it will ‘carefully consider’ how to proceed with the recommendation of the minimum wage committee.

But the Manx Labour Party said it disappointed that the proposal by the minimum wage committee was putting the target date for parity with the living wage at ‘serious risk’ - and this was treating lowest paid workers with ‘utter contempt’.

The minimum wage hourly rate for adults rose from £10.75 to £11.45 from July 1, following interim recommendations by the minimum wage committee.

However, the Isle of Man living wage for 2024-25 stands at £13.05 per hour, up from £12.01 per hour last year.

In July 2021, Tynwald approved the recommendation of the poverty select committee that the ‘minimum wage should transition to the living wage within five years’.

But the government’s Island Plan subsequently set out a commitment to bring that goal forward by more than a year, to April 2025.

A report by consultants Pragmatix Advisory, commissioned by the minimum wage committee and funded by the Department for Enterprise, concluded, however, that would be moving too fast - and advised a longer period of transition.

It found that the island’s poorest families will see little benefit from the higher wages as they depend more on benefits and pensions income.

But it said that government will be the big beneficiary, bringing in an extra £89m in tax, including £72m from the private sector.

Following that report, the minimum wage committee has recommended against any increases to the minimum wage before April 2025, following the 6% interim increase implemented in July.

It concluded that a greater rise ‘risked jeopardising business viability in vital sectors of the economy’.

Enterprise Minister Tim Johnston said the independent report raised ‘important points for consideration’.

He said: ‘We will be discussing the implications of the report and recommendation over the next few weeks before considering next steps.

‘We acknowledge that many households and businesses are navigating significant challenges, and that it is essential to recognise that these difficulties can compound and strain budgets – both personal and business-related.

‘In order to move forward, it is crucial that any proposed changes strike a careful balance which meets the needs of our community, prioritising fair wages whilst also supporting the financial stability of businesses to create a more resilient economy where everyone can thrive.’

The Manx Labour Party said it was disappointed to learn that no increase had been recommended before April 2025.

A spokesperson said: ‘The MLP welcomed the Island Plan Tynwald commitment target that would have seen the alignment of the minimum wage and living wage from next year.

‘The lack of support for this proposal from the independent minimum wage committee puts this target at serious risk.

‘The MLP stands firm that any further deviation from this recommendation would be treating the lowest paid workers within our community with utter contempt.’

It urged the government to stick with the commitment to harmonise the minimum and living wages by April next year or at the very least implement a further staged increase in April 2025.