Monday, June 09, 2008

Minimum Wage Rises to £6

Minimum wage in the Isle of Man is looking like it's going to jump from £5.60 an hour to £6 an hour. I must be getting on, I can remember when that was a fairly decent wage (my first job as a computer programmer paid £3.85 and hour and I'm not THAT old).

So what does this mean? Basically anyone working full time (call it 37.5 hours a week) on the Isle of Man is going to be earning at least £11700. Stick holiday pay, sick pay and employers NI on top of that and a rough estimate is around £13500 a year. That's what the minimum annual cost is to employers. Any emmployer is looking for a return of 30-50% on top of that just to make it worth their while employing you, the hassle of staff issues, the extra administration (and staff) payroll etc etc so in order to earn your pay you've got to be earning at least £17500 a year or providing £17500 a year of value to your employer. I have a sneaky feeling that the cost of living is about to make another little jump over here. As you increase the costs to lower end service providers such as cleaners they up their prices which in turn increases the costs of other businesses who use their services and it goes on and on until everybody has upped their prices and the consumer foots the bill. All of a sudden that 40p an hour pay rise for those on minimum pay doesn't seem so great when you are having to pay £1.60 for a loaf of bread and your landlord has upped your rent by 5%.

If I was in a position to hire staff, I just wouldn't. Well not unless I could hire them on my own terms anyway, I'm taking the risk running my own business so I decide the terms, like it or get a job elsewhere. I'd be much happier letting the labour market decide what minimum pay is.

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