Business leaders call for government help with the cost of living crisis
The Chamber of Commerce has issued an open letter to the government.
Our Government must address the severity of the cost of doing business crisis.
Chamber recognises that rising costs are affecting the whole community, especially the most vulnerable members of society and low paid workers, and welcomed plans announced by Isle of Man Government on August 4 to provide ‘targeted support’ to help those most in need to pay rising fuel bills.
However, more needs to be done to help our members who represent businesses that provide over 20,000 jobs.
Businesses in all sectors are being affected by increases in the cost of electricity, gas, oil and freight.
Energy costs are the second biggest operating overhead (after payroll) for most businesses on the island – and energy prices here, particularly for gas, are considerably more expensive than in the UK (gas is about 50% higher per kilowatt hour).
Members are conscious also that gas sourcing, electricity provision and freight charges are all under the umbrella of the Isle of Man Government.
The Steam Packet Company will make a more normal profit this year, with freight as the largest contributor to this. For food and retail businesses the only option is to pass costs on to Manx consumers, thus funding profit for Government.
On top of this, businesses are now grappling with the highest inflation in almost 40 years; the largest spike in interest rates in three decades.
Chamber is calling for the Isle of Man Government to act now use the power it has to offer vital support to businesses right now, and not wait until the autumn or winter.
UK businesses are lobbying the UK Government for a reduction in the VAT rate from 20% to 5%, and we acknowledge that if this goes ahead then the Isle of Man will follow suit. However, we cannot wait for a reduction in VAT to help businesses, and the Isle of Man Government must offer other solutions now.
Our Government acted during the pandemic and this is every bit as important. Problems are only going to worsen as we move into autumn and winter.
The recent announcement that the Living Wage had been miscalculated since 2017 was a shock to Chamber and our members.
Many believe that this has unnecessarily fuelled inflation in their own businesses.
Whilst we acknowledge that the Living Wage is not statutory, many businesses use it as a benchmark and align it with their organisation’s values as ‘the right thing to do’.
Businesses that want to pay their staff fairly must be able to reply on the government figures.
More important than that, however, is the effect on the economy of those paid below the Living Wage rate.
Chamber is asking for a full review into the calculation of the Living Wage since 2017 and request that it is calculated by an independent body such as the Real Living Wage Foundation using a trusted and recognised formula that is already supported by numerous businesses.
Energy Prices/Cost of Living
Chamber has serious concerns for businesses during winter as the cost of energy bills will rise even further. Chamber has therefore been lobbying for business support to help them meet the cost of energy bills.
Many Isle of Man workers are worse off financially than those on benefits as they often live in expensive private rentals, have the same pressures on bills etc, but their salary leaves them with less disposable income than many on benefits.
Chamber is calling for assistance for workers that fall into this category. Many people NOT on benefits are in an extremely vulnerable position as well and this does not seem to be recognised either in assistance or in Government language or rhetoric.
Skills and labour shortages have reached crisis point for many firms.
The impact is being felt on their ability to meet customer demand, and forcing some to turn away new business because they simply do not have the human resources.
This is restricting growth and business confidence. It’s a serious and urgent problem.
More needs to be done to encourage economically active people back into the workforce.
The figure in the Economic Strategy suggests that circa 10,000 are in this category.
The figures need further examination to understand where short term policy and incentives could return people to the workforce quickly.
We fully support the Workforce and Skills Strategy work that is in progress and ask government to ensure that this work is given full resource, and soon, in order to succeed.
Like the UK we would also like to see a ‘dialling down’ on immigration policy ‘Skilled Worker’ visa categories for a fixed time, to include a much wider range of skills.
Increasing shipping costs are affecting the viability of some businesses. If the Isle of Man Steam Packet rates increase in line with inflation, freight shipping will simply become unaffordable.
Chamber would like the opportunity to discuss ongoing freight costs with government and potentially set a cap, acknowledging that this is also currently fuelling unprecedented levels of inflation.
The lack of affordable housing available on the Isle of Man is stifling growth.
We support Government’s recent encouragement to landlords to offer housing for key workers.
Chamber would like to see wider plans progressed for all workers to tackle the workforce crisis.
Our Think Tank has produced a document of ideas to hasten the development of key worker and affordable housing.
In the short term we would like to see an agile and progressive programme to amalgamate all empty public sector housing into one entity, and upgrade and release that housing for key workers, which would help businesses to recruit more young skilled workers.
As always, Chamber appreciates the challenges facing government.
We also welcome ministers’ willingness to continue dialogue which is crucial in helping the public and private sectors to work together towards the shared goal of growing the Isle of Man’s economy.
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