No easy fix for minimum wage row
IN THE UK, where the cost of living is around a third cheaper than it is here, the minimum wage is to be set at just more than £18,500 for a 37.5-hour working week. By contrast, if proposals from Employment and Social Security are approved, high-cost Guernsey’s minimum will be approaching £900 a year less.
And that, says the Committee for Economic Development, is too much. It should be even less, to protect businesses like retail and hospitality and to avoid stoking inflation.
Madness, say the charitable groups. Guernsey taxpayers are already subsidising borderline sectors by topping up low wages through income support.
So who’s right? Oddly enough, all are. Social Security is on a mission to lift wages to 60% of median earnings, but it cannot hit that £22,000pa ceiling in one go. Incrementally is the way ahead.
Equally, Economic Development is right to warn of the consequences of a 4% increase in wages – excluding the cost of higher social security contributions – on businesses that are already on their knees after Covid and Brexit. More closures in the High Street, anyone?
While the arguments against propping up poorly-paying sectors are strong, there are economic and island consequences of either driving them out or forcing them to hike prices to their customers.
Guernsey air fares are already significantly higher than those to Jersey and accommodation and hospitality costs much more expensive than in popular destinations like Spain.
Yet islanders depend on the leisure and business visitor to maintain air and sea links at the frequently-criticised levels and prices they are now, so making this a less favourable destination becomes a Guernsey, not just employment, problem.
Economic Development members will be decried as heartless for resisting a full 4% increase but they are aware of the wider context of such a jump and the impact it could have economically.
There is no easy or ‘one size’ answer to this. But critics should listen to Economic Development’s reasoning for a lower increase at this time before dismissing it simply because it doesn’t fit with their thinking.