Government has backed down on proposals to increase the minimum wage twice this year.

Tynwald had been asked this month to approve plans to raise the minimum wage to the level of living wage.

It would have seen the rate initially increase from £11.45 to £12.25 per hour from April 1, and then a further increase from October 1 to £13.05 per hour - which is the current level of the living wage.

The planned increases had sparked concern from small businesses already struggling in challenging economic times.

But now the proposals have been revised.

Tynwald will now be asked to approve a single initial increase to the main rate of the minimum wage to £12.25 from April 1.

But October’s planned second increase has been deferred pending a review.

The Department for Enterprise and Treasury said this followed feedback from industry and a range of representatives.

Steve Pickett, interim chair of Hospitality IoM welcomed the move.

He said: ‘The Hospitality Isle of Man Board welcome the change to the minimum wage proposals.

‘This will be a huge relief for many businesses across the hospitality sector and the wider economy.

‘The Hospitality Board also agree that a detailed review of the wider impact on earnings and wage costs sustainable by businesses must be considered.

‘The minimum wage cannot be considered in isolation, and we would welcome the review taking into account the current minimum wage age brackets and related taxation bands.

‘Hospitality IoM is committed to working directly with the Treasury and DfE to ensure these proposals and future changes are manageable and sustainable for all stakeholders.’

The review into the current methodology of agreeing proposals in respect of the minimum wage and its link with the living wage will report back to Tynwald in July.

Enterprise Minister Tim Johnston said: ‘While we still have the ambition of achieving parity with the living wage, we are aware of the pressures that will be felt across our economy, particularly around the second proposed increase, and the need to strike the right balance.

‘The impact of the current Tynwald policy position to achieve parity with the minimum wage and living wage rates, which places the island in a unique position to other jurisdictions, requires further detailed consideration.

‘I would like to thank businesses and sector representatives for raising their concerns and am confident we can continue to work together to find a way forward.’

Treasury Minister Dr Alex Allinson said: ‘While government remains committed to delivering the Tynwald resolution to match the minimum wage with the living wage, we also have a duty to listen to the concerns of members and the wider business community.

‘That is why we are amending our plans and will be carrying out further work on the relationship between the calculation of the living wage and the minimum wage to meet our obligations to the lowest paid workers in our community, while also recognising the challenge for businesses.’