The introduction of a Manx living wage will be considered at the October sitting of Tynwald.
The Economic Affairs Division of the Cabinet Office has published a report on the issue in line with a commitment in the Programme for Government and in response to a motion approved by Tynwald Members in January.
The Isle of Man Living Wage 2017 explains the benefits and potential impacts of the proposal and the methodology used to arrive at an hourly wage of £8.61.
The concept behind the living wage is that there is a level of income that not only allows people to meet their basic needs, but also provides them with opportunities to participate more fully in family and community life.
It is a voluntary rate of pay that companies can choose to adopt to demonstrate their position as responsible employers, whereas the minimum wage is legally enforceable.
In addition to covering expenditure on the necessities of accommodation, food and clothing, the living wage seeks to make it possible for people to afford items in line with the expectations of modern society, for example, internet subscriptions and activities for children.
The living wage has been established in the United Kingdom for many years. Following the Tynwald motion in January, work has taken place to calculate a Manx living wage using the UK’s standard methodology, but taking into account Isle of Man-specific expenditure, such as additional transport costs, and using Manx prices collected in July 2017.
The Manx living wage 2017 has been calculated at £8.61 per hour, which is £1.11 per hour more than the Island’s current minimum wage of £7.50 for over 25s and compares with £8.45 for the UK living wage. This would amount to an annual increase of £2,447 for a full-time employee in the Island who moved from the minimum wage to the living wage.
The Cabinet Office report provides an initial assessment of the potential impact of the introduction of Manx living wage on low income workers, employers and government, as well as prices and economic activity. It also outlines the next steps in the journey.
Further work will be carried out, including consideration by the National Economic Development Forum, which includes representatives from the business community, the voluntary sector and the trade unions.
Policy and Reform Minister Chris Thomas MHK said: ‘This Government is committed to promoting a caring and inclusive society by ensuring that more people are sharing the success of the Isle of Man’s economy. The take-up of a voluntary living wage would not only help lower paid workers and contribute to a campaign against poverty, it would reduce the payment of certain benefits and increase the receipt of taxes and national insurance to support our public services.’
He added: ‘The proposal to establish a living wage will need careful consideration, as it could have an impact on employers, particularly those in the lower paying sectors of the Manx economy, and also on prices and on economic activity more generally. The widespread adoption of a Manx living wage will not just happen. More work and action would be needed to take this forward.’