Construction Isle of Man has warned that the island’s approved minimum wage increase could have wide-ranging consequences for jobs, training and the delivery of major projects unless changes or mitigating measures are introduced.

The organisation, which brings together businesses operating across the Isle of Man’s construction sector, has called for urgent dialogue with the government over the planned 9.9 per cent rise in the minimum wage, due to take effect from April 1 next year.

The increase will see the single hourly rate rise from £12.25 to £13.46, with the rate for young workers increasing from £9.55 to £10.76.

Construction Isle of Man said the scale of the increase was already having an impact across the industry.

It warned that ‘the scale of the increase - almost 10 per cent - is already driving higher wage expectations across all skill levels’, adding that this was intensifying pressures at a time when firms were also managing rising material costs, significant utility and haulage bills, skills shortages and fixed-price contract commitments.

The organisation said that without reform, the implications of the increase could extend beyond immediate wage costs.

It warned that ‘apprenticeship opportunities and the island’s long-term skills pipeline may be at risk’ if firms are forced to cut back in response to rising overheads.

Concerns were said to be particularly acute for companies delivering government-funded projects, where contracts typically do not allow for costs to be adjusted once work has begun.

Construction Isle of Man said several capital schemes were already ‘experiencing delays or reconsideration due to escalating costs’.

It warned that smaller contractors, many of which operate on tight margins, could face difficult decisions.

The statement said some firms may be forced into ‘workforce reductions, higher tender prices, or withdrawing from some types of work altogether’ if the increase is implemented without additional support.

Construction Isle of Man urged the government to consider alternative ways of supporting lower-paid workers while avoiding what it described as the destabilisation of the sector.

It said these could include raising the personal tax allowance, introducing a tiered minimum wage structure based on age or experience, and establishing ‘a dedicated trainee wage to protect apprenticeship and graduate entry pathways’.

The warning comes amid wider concern across the business community about the impact of the minimum wage increase.

In an open letter to the Isle of Man Government and all members of Tynwald earlier this month, the Isle of Man Chamber of Commerce said the rise represented a ‘national crisis’ for businesses and could have a ‘devastating’ impact on the economy without urgent intervention.

Chamber said many firms were already operating at the limit of viability due to rising costs, wage compression, energy price inflation and a declining domestic economy.

Despite warnings from business groups and the Minimum Wage Committee about potential impacts on employment, inflation and competitiveness, the increase was approved by Tynwald recently.

An amendment calling for Treasury to increase the personal allowance threshold was defeated, as was a proposal to introduce a phased rise.