Knowledge

The Committee for Employment and Social Security ("ESS") in Guernsey have submitted proposals to significantly increase the minimum wage levels for both adults and young people from October 2023.

Increase to minimum wage rates

The ESS propose to increase the adult minimum wage by 12% from £9.55 to £10.65. This will equate to an additional £2,700 per annum for a 40-hour work week.

The ESS have also proposed an increase to the young persons' minimum wage rate of 8% (in line with inflation) from £8.95 to £9.65.

Off the bat, the 12% increase to the adult minimum wage may seem high. To put it in perspective, it will place Guernsey on an equal footing with comparable jurisdictions like Jersey, which already has a minimum wage of £10.50, and the UK, which has a national living wage of £10.42, both of which are likely to increase within the next year.

This increase also comes after a two-year halt in the ESS's five-year plan to increase the minimum wage in increments until it reaches 60% of median earnings, which currently comes in just under £39,000. In these two years, lower rates than planned were applied, causing a set-back to the five-year plan.

Consultation

Employers and employees were allowed until 25 May 2023 to comment on the proposed increase during the consultation process.

States debate

The States debate is set to take place in July 2023. This will be the final opportunity to consider opposing views on whether the proposed increases strike the desired balance between the needs of low-income workers (and the need to attract and retain workers in low-skilled industries where housing limitations pose considerable challenges for employees) and the needs of businesses, who are only just coming up for air after COVID-19 and often struggling to meet their statutory wage obligations.

Click here to access the ESS consultative note, setting out further detail on the intention behind the proposed increases.

All indicators point to the likelihood of the proposals being passed by the States, with the ESS president Deputy Peter Roffey being quoted by the Guernsey Press as stating:

"There is a statutory duty to consult, but to change our mind about the proposed rates there would need to be a fairly overwhelming response to the consultation, with evidence of the damage that this change would do to the economy."

Employers who engage minimum wage staff are reminded to review their remuneration structures ahead of the proposed increases to allow time to make any required changes.