Big rise planned for minimum wage

Wednesday 03 October 2018

Employees could see the biggest minimum wage hike in over a decade, if the States take the advice of the Employment Forum - but business leaders are warning that the extra cost could hurt them at a time when they're already vulnerable.

The Forum wants to see all employees over the age of 16 being paid £8 an hour by this time next year.

The employment body are recommending an increase of just under 7%, which is higher than the rate of inflation, and would equate to an extra £1,082 per year for low-paid staff working a 40-hour week. It will now have to be considered by the Minister for Social Security, Deputy Judy Martin.

Pictured: Social Security Minister, Deputy Judy Martin.

The current minimum wage in Jersey is £7.50 per hour and applies to all employees over the age of 16. The recommended increase to the minimum wage of 6.9% is much higher than the rate of inflation which currently stands at 4.5%, as of June 2018. 

The Forum has advised that to smooth the transition to a higher minimum wage for employers, that the increase should take place in two stages. The suggestion by the Forum is that there is a 5% increase to £7.88 per hour from April next year, followed by a 1.8% increase to £8.02 per hour by next October.

The Forum, which advises the Minister on employment-related issues, says it has come to this figure in line with consultations, statistics and the aspiration of the States Assembly that the minimum wage should reach a figure equivalent to 45% of average earnings by 2020.

Business lobby group the Chamber of Commerce previously voiced concerns that lifting the minimum wage towards £10 an hour could cost jobs.

Despite these worries, Helen Ruelle, Chair of the Employment Forum said: “There was more positive economic evidence to draw upon this year than in recent years. Despite a 4.5% minimum wage increase in April, the statistics show little evidence of job losses, more people are employed in Jersey than ever before and unemployment continues to decrease.”

Pictured: Helen Ruelle, Chair of the Employment Forum, says that there is "little evidence" to support claims of job losses after the latest minimum wage hike. 

Ms Ruelle acknowledged that the prospect of such hike could worry employers, particularly in agriculture, but she hopes that the two-part implementation “will allow them to absorb a greater wage increase and wage costs would be kept down at potentially the busiest time in the season for many employers in agriculture and hospitality.”

She added: “The increase we recommend is often too high from the perspective of minimum wage paying employers and too low for those who wish to reach 45 percent of the mean weekly earnings by 2020.”

Despite Ms Ruelle's optimism, the Chamber of Commerce is still sceptical of such a significant wage rise during what they call a "time of great uncertainty."

Chamber President Eliot Lincoln said that although the employer representative body "fully understands and supports the desire for improvement to be made to wages", he expressed concern regarding the negative impact on the agricultural, hospitality and retail sectors with the possibility of consumers being saddled with the extra cost.

"It is vital that these recommendations, if adopted by the States Assembly, are supplemented by meaningful actions and strategies from Government to support our industries through critical and competitive times," he said.

He added that this support could be provided "by levelling the playing field on discrepancies in GST and Retail Tax, providing promised, but not delivered, productivity improvements and by easing the current recruitment crisis for employment permissions in all three sectors." Mr Lincoln said that the staggered introduction of the wage increase "could put an administrative and therefore extra cost burden on those affected."

Pictured: Jersey Chamber of Commerce President Eliot Lincoln said that the body's concerns regarding the minimum wage hike are not allayed by the Employment Forum's review and recommendations.

He continued: "The Jersey Chamber of Commerce advised caution to the Employment Forum in overtly destabilising the delicate ‘eco-system’ surrounding wage increases. Particularly at a time of great uncertainty because of Brexit, when retailers face increased competition from online retailers unencumbered by GST, when agricultural industries are reporting decreased and approaching zero profit margins and at the point of recovery against global competition in tourism.

"It may be that significant wage rises may also cause employers to review their workforce, resulting in lower hours being provided and in extreme cases, job losses."

The Minister will consider the Forum’s recommendations and is expected to announce her decision on the minimum wage soon.