Employment Forum recommends 6.9% minimum wage increase

02 October 2018

The Employment Forum has recommended a 6.9% increase on the current minimum wage for all employees over age 16. 

The increase would be in two stages, the first to take effect on 1 April 2019 and the remainder of the increase to take effect on 1 October 2019:

This is the highest percentage increase the Forum has recommended in ten years. The overall effect of the 6.9% increase equates to an extra £1,082 per year from October 2019 for low-paid staff working a 40-hour week. 

The Forum's decision 

In making its recommendation to the Minister, the Forum considers all the relevant evidence. That includes the views of stakeholders, the latest statistics and economic advice, as well as the aspiration of the States Assembly that the minimum wage should reach 45% of average earnings by 2020, subject to economic conditions and the impact on competitiveness and low-paying jobs in Jersey.

Helen Ruelle, Chair of the Employment Forum said: “There was more positive economic evidence to draw upon this year than in recent years. Despite a 4.5% minimum wage increase in April, the statistics show little evidence of job losses, more people are employed in Jersey than ever before and unemployment continues to decrease. 

Employers and minimum wage

"Many stakeholders, including employers and their representatives, supported a minimum wage increase in line with RPI. However, it was also clear that employers are increasingly feeling the impact of external pressures, including local taxes and Brexit. Many employers in the lower paying sectors continue to have difficulty recruiting staff.

"A significant increase in the minimum wage is likely to be challenging for some employers, particularly in agriculture. The Forum's recommendation to defer part of the increase to October 2019 means a more significant overall increase can be achieved in 2019, while the impact on employers is reduced.

"Business will have an extra six months to adjust and implement strategies that will allow them to absorb a greater wage increase. Wage costs would be kept down at potentially the busiest time in the season for many employers in agriculture and hospitality. 

Improve productivity 

"A programme to improve productivity in lower-paying sectors is currently being developed by the States of Jersey, so the deferral of part of the minimum wage increase will give businesses more time to get involved in the development of the plan and to lobby for the support they require to pay higher wages. 

"The increase recommended is often too high from the perspective of minimum wage paying employers and too low for those who wish to reach 45% of the mean weekly earnings by 2020. Based on the June 2018 weekly earnings figures, a minimum wage rate of £8.02 per hour would be equivalent to 43.4% of the level of mean weekly earnings, rising from 41.1% last year. This demonstrates a willingness to reach the 45% relatively quickly, without being excessive in view of the evidence.

"The Forum is grateful to everyone who gave their views in the individual stakeholder meetings, as well as in their responses to our survey which provided us with very detailed and good quality data. Having balanced all of the evidence, the Forum is pleased to put forward this unanimous recommendation to the Minister.”

Trainee rates

The Forum is also required to recommend two trainee rates and the maximum amounts that can be counted towards pay, where the employer provides meals and accommodation as part of the employment package.

The Forum has recommended that the trainee rates and the maximum offsets should also be increased twice in 2019.