The Chamber of Commerce is concerned that businesses have “short time” to predict the island’s minimum wage hike in April.
Many businesses will be forced to raise their prices if the island’s minimum wage increases this year.
The government recently announced plans to set the rate at £9.50, subject to Tynwald’s approval. This is an increase of £1.25 per hour.
A Chamber of Commerce survey took into account the views of various sectors, including finance, retail, transport, tourism, hospitality and others, and found that they were not prepared for a quick turnaround.
House Speaker Kristan McDonald said: “From our survey, it is clear that many feel they have had very little time to react to the financial impact this increase will have. It seems likely that this will have a ripple effect on commensurate wage increases across the board, and that a majority of companies will have no choice but to pass the 13% rise on to the consumer who, when ‘combined with other inflationary pressures we are seeing, will discourage spending in the local economy.
“If the proposed increase in the minimum wage is introduced in April, a phased implementation would give businesses more time to adapt.
“With many still recovering from the impact of events over the past two years, tax and national insurance relief would also help support the recovery, and the reduction of VAT to 5% for the food and beverage would certainly benefit cafes, bars and restaurants which have been hit harder than most businesses during the pandemic.
Meanwhile, Enterprise Minister Alex Allinson said he acknowledged business concerns.
He was asked in a House of Keys sitting this week what discussions had taken place with the Treasury and local businesses about cost increases by Arbory, Castletown and Malew MHK Jason Moorhouse.
Dr Allinson said: ‘Recently here on our island and around the world there have been a number of cost pressures due to a number of underlying causes including wage inflation, prices energy, the increased cost of travel and supplies, and services in general.
“Agencies in the department are overwhelmingly made up of private sector representatives who can think about and discuss some of these challenges within their own sectors and across the department. We regularly meet with various groups to discuss issues and opportunities facing businesses.
“The Chamber of Commerce meets regularly with the department to discuss specific issues, representing approximately 500 local businesses.
“The costs of inflation and other general cost increases are clearly a concern and we will continue to review the overall situation with the Treasury.
‘Going forward, our costs and barriers to business are also being assessed as part of the work with KPMG on our proposed new economic strategy for the island, this work will be reviewed by the Economic Strategy Board, in which the two departments are represented.
“We will continue to monitor the situation on the Isle of Man.”
The minister explained that when it comes to VAT rates, the island follows the UK. The Treasury has taken no steps to review the current VAT rate apart from the British position.