An amendment from Sasha Kazantseva-Miller would have pushed any change back until January next year and left the new rate uncertain.
Critics of the amendment also feared that it would increase the chances of a smaller adjustment in the minimum wage by stressing its link to inflation, which is forecast to slow in the months ahead.
The amendment, seconded by Bob Murray, was defeated by nine votes to 26, as the States instead backed Employment & Social Security’s proposal to put up the adult minimum wage to £12.60 an hour and increase the rate for 16- and 17-year-olds to £11.35 an hour from October.
ESS president Peter Roffey described his committee’s proposal as ‘modest’ and the least that the island’s lowest-paid workers should expect of the States.
‘I have to flag that these proposals will mean that we are starting to fall far behind perhaps our nearest comparator, Jersey,’ he said.
‘They increased their minimum wage to £13 an hour at the start of this month and all the indications are that they will have another large increase again next year.
‘They have also set aside a sum of £20m. to help employers in traditionally low-paying sectors to become more productive.’
The adult minimum wage in Guernsey is currently £12 an hour. ESS had consulted employer and employee groups on two options for the new rate – £13, in line with Jersey, and £12.60, representing a 5% increase.
Consultees predictably had mixed views. ESS eventually settled on £12.60, rather than trying to match Jersey’s commitment to move to a minimum wage of two-thirds annual earnings, partly because the States could not afford to replicate Jersey’s investment in the productivity of low-paying sectors.
‘We were also very aware that we have increased Guernsey’s minimum wage in real terms quite significantly over recent years. We felt that a period of stability, albeit with a very modest real terms increase, was justified,’ said Deputy Roffey.
ESS was proposing the new rates earlier in the year than normal, with the general election about to cause a break in normal meetings of the Assembly, although Deputy Roffey preferred the timetable and hoped the next committee would stick to it.
Deputy Kazantseva-Miller disagreed, saying the main point of her amendment was to allow new rates to be set by the next ESS, after the election, using more recent economic data.
‘We have undergone a period of significant inflation, including putting up the minimum wage by 12.7% in October 2024,’ she said.
‘The key for us is to consider local economic indicators and one of the key indicators is inflation.
‘The inflation figure used by the committee was December 2024 RPIX, which was 4%.
‘We are still in a period of high uncertainty in the trend in inflation. If inflation goes up, these minimum wage proposals could be unfair to workers on the minimum wage, and if inflation goes down they are potentially disproportionately high increases, and that has a really significant effect on the rest of the economy and businesses.’
In future Deputy Kazantseva-Miller wanted adjustments to the minimum wage to be decided closer to the time of the States’ annual budget debate in November and to take effect when the tax year starts in January.
Despite seeing her amendment defeated, Deputy Kazantseva-Miller had pushed ESS into laying one of its own to look into the issues she had raised while going ahead with the increased minimum wage in October, and the committee’s amendment was carried by 28 votes to 7.
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