Business pressure leads to abrupt change in minimum wage plans

Tuesday 20 September 2022

The Government has decided to revoke a £10 rise in the minimum wage next month in favour of a move to £10.50 in November after one of the island’s key business groups lobbied the Chief Minister directly about the “burden” its proposals would place on its members.

Allowances able to be deducted from employees’ pay for food and accommodation known as ‘offsets’, which are most commonly used within the agricultural and hospitality sectors, will also rise by around 26% from January.

Social Security Minister Elaine Millar signed off on an order to increase the minimum wage to £10 from 1 October last Wednesday, against the advice of the Employment Forum, following a commitment in the Chief Minster's '100-day vision' to do so in order to "hasten" progress towards a Living Wage, ahead of a further increase in January.

However, there was robust backlash from the Chamber of Commerce, which described notice of the change as "unacceptably short" due to the administrative burden it would place on businesses, and expressed frustrations over the additional challenge of implementing a further rise in January.

The group said it scheduled a meeting with the Social Security Minister on Friday afternoon, but that this was cancelled, so instead "seized an unscheduled five-minute meeting with the Chief Minister in Broad Street to express our real concerns."

No show/diary confusion/no meeting unfortunately for us. However excellent & productive 5 min meeting between CM @Moore4Jersey @MurrayNorton & @jerseychamber team #Direct #pragmatic #lessredtapeplease https://t.co/C3NhgtZUxT

— Jersey Chamber of Commerce (@jerseychamber) September 16, 2022

As well as asking for a single wage rise to £10.50 rather than a gradual step-up, Chamber also asked for 'offsets' to rise in November.

Announcing the change in plan, Chief Minister Deputy Kristina Moore said it should "give hard-working families the support they need during the cost-of-living crisis", while Deputy Millar said it would also reduce the "admin burden on businesses."

While Chamber CEO Murray Norton said he was "grateful to the Chief Minister and Ministers for listening and accepting" its "sensible proposals" and "acting quickly to rescind" the October rise to £10, he said Chamber could see "no reason" why the rise in offsets could not also be introduced in November alongside the £10.50 wage.

He added that "greater engagement" will be required from Government as it seeks to develop its Government Plan.

Asked whether she had regrets or concerns about the process of setting the minimum wage after having to make changes in short order, Deputy Elaine Millar told Express this morning: "I think 'regret' is the wrong word because what we have – although it may have caused a bit of confusion and concern with business owners last week – what we have is a solution that is better.

"It's certainly better for employers... What we wanted to do was increase the minimum wage more quickly to get it to a higher level and what we've been able to do is bring that forward to November rather than have a small increase in October.

"We've been able to get a bigger increase in November rather than waiting to January so it means people will have more money in their pockets before Christmas, and for the rest of next year."

She continued: "...It's not going to become the norm, I would hasten to add – normally, we have an annual increase, and I know we've done something different this year, but that's entirely to respond to the cost of living crisis that we've all heard so much about and it does impact those on the lowest incomes most badly... So we were keen to do something and I think the outcome is good for everybody."

Not all groups shared that view, however.

While the Chamber of Commerce was partially satisfied with the change, supporters of the Living Wage – which is currently set at £11.27 per hour, taking into account the wider cost of living locally - have expressed concerns.

The Government had asked the Employment Forum – an independent body tasked with liaising with business groups and recommending a minimum wage – to explore "the question of a rise in short time to the minimum wage target agreed by the previous States Assembly of two thirds of the average median wage" – roughly £10.80.

Caritas Jersey, which administers the Living Wage accreditation scheme in Jersey, said it was "disappointed" that the Government wouldn't be working towards this target.

"In a cost of living crisis, this 30p per hour less is a real hit to those in poverty," Caritas said on Twitter today.

Good news minimum wage will rise to £10.50 on 1 Nov but disappointed that CoM has not fulfilled their stated intention of £10.80!! In cost of living crisis this winter 30p per hour less is a real hit to those in poverty @ElaineMillarJsy @Ian_Gorst @KirstenJersey @Moore4Jersey

— Caritas Jersey CEO (@CaritasJsyCeo) September 20, 2022

"We call on @GovJersey after this climbdown to assist those in poverty, [especially] those without five years' residency, by supporting mini-budget amendments to extend the Social Security 2% cut to 31 March. Otherwise it's a pay cut for many at most expensive time of year. Please do the right thing!"

JPRestaurants CEO Dominic Jones said: "Yet again @GovJersey fails to implement a minimum wage in accordance with their stated aspirations and despite support of Reform Jersey.

"At some stage we are going to have to 'walk the talk' as we get left behind our EU neighbours' legal minimum wage of 60% of the median wage."

These replies to the MW consultation make interesting reading with a business stating there should be a "wage cap" to stop poaching and one servicing the finance industry that says it can't put up wages as their customers won't pay. 2/2 https://t.co/o66w0hfbXT

— Dominic Jones (@DominicCJones) September 20, 2022

This afternoon, States Members are due to debate the Government's £56m 'mini-budget' proposals, which include various measures to help islanders with the cost of living, and several amendments.

Deputy Millar said that the Government would be keeping an eye on whether the proposals had fulfilled their aims, but that no specific date was set for a review.

"It's a constant review process, we'll see what happens with the cost of living, what's happening with inflation and how that's impacting people."