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Increasing the minimum wage to £13 per hour could force businesses to close or to reduce their operating hours and staff, according to Jersey's business community.
The Chamber of Commerce has warned about the potential economic fallout of a proposed transition to a Living Wage in a statement yesterday.
The organisation, which represents the island's business leaders, said the wage hike could lead to businesses closing or reducing operating hours and staff.
It comes after the Chief Minister confirmed plans to raise the minimum wage to around two-thirds of median earnings by 2026 at a Chamber of Commerce event last week.
Pictured: If States Members support a proposition lodged by Social Security Minister Lyndsay Feltham, set to be debated on 16 July, the minimum wage will be set by ministerial order for a temporary period.
Deputy Lyndon Farnham attempted to reassure an audience of business leaders that businesses would be supported during the transition.
He said that up to £20 million will be allocated over the next two years to support productivity schemes across sectors like retail, agriculture and hospitality.
But Chamber CEO Murray Norton said that business leaders are "very concerned and shocked at that figure and just how sustainable it will be for their business".
He pointed out that the proposed increase would represent a 69% rise in the Minimum Wage since 2021.
Pictured: Chamber of Commerce CEO Murrary Norton at a lunch event at the Pomme D'Or Hotel on the 19 June. (Lauren Claire)
Mr Norton added: "The concerns are that the inevitable price rises will make Jersey a less competitive destination for visitors no matter how much we throw at marketing Jersey.
"Some will reduce hours of operation, some will reduce staff and some businesses will sadly close."
Tim Crowley, Chair of the Chamber Visitor Economy Committee, questioned whether the Living Wage would benefit its intended recipients, particularly in sectors with short-term contracts where accommodation and food are provided.
He said: “We need to be clear on who a Living Wage is meant to help and where it may be slightly misguided, whereby many of those that will benefit from the rise to living wage, work in sectors where they are on short-term contracts where accommodation, utilities and food are provided, and they are rightly saving to return home."
Meanwhile, Chamber President Adam Budworth stressed the need for careful implementation.
He said: "Politically we understand the decision has been made, it is in the strategy and the States have overwhelmingly supported the move.
"What we need to agree on are the measures to implement and having the right data to avoid unintended consequences for the economy and the businesses who will be placed again under huge pressures to keep trading."
Pictured: Deputy Lyndon Farnham at the recent Chamber Lunch. (Gary Grimshaw)
Mr Budworth also raised concerns about the impact on youth employment.
He said: "We are also concerned for the youngest age brackets of employment and those starting out with Saturday jobs, who might find it more challenging to find employment at the same predicted £13 per hour as other workers for whom a Living Wage was designed.
"Perhaps we need some nuanced levels to a new higher minimum wage."
The Chamber of Commerce said they plan to engage in consultative sessions with businesses and Government officials to discuss economic impacts and support packages.
Transitioning the minimum wage to two-thirds of the median wage – a similar indicator to the living wage – was outlined in the Common Strategic Policy, which sets out the Government's priorities for the next two years.
Deputy Lyndsay Feltham recently suggested that an “intermediate rate” in should be introduced 2025, with the full two-thirds rate to be brought in at the start of 2026.
In her proposition, set to be debated on 16 July, Deputy Feltham states that the changes would be compatible with the European Convention on Human Rights.
The minimum wage is currently £11.64, which has increased from £9.22 since 2022.
This is £1.77 an hour less than the £13.41 living wage for 2024, which is set by Caritas Jersey – a charity licensed by the UK’s Living Wage Foundation that accredits living-wage employers.
A living wage is defined as an amount that provides a worker with the ability to maintain a normal standard of living.
In 2022, 2% of island workers were being paid the minimum wage, with another 2% close to minimum wage, with those workers concentrated in the hospitality and agriculture sectors.
In addition, in 2023, 14% of private-sector workers were being paid between the minimum wage and living wage.
The most recent figure for the median wage in June 2023, published by Statistics Jersey, was £800 per week, an hourly equivalent of which – based on a 40-hour week – would be £20, with the two-thirds figure being £13.33, just eight pence lower than the current living wage.
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