Big increases to the minimum wage are ’essential’, both socially and economically, a Treasury department member says.

Bill Shimmins (Middle) has urged for the Isle of Man to keep up with or stay ahead of UK rates.

He told Tynwald this week: ’Significant increases in the minimum wage are essential for our social and economic prosperity as an island.’

New minimum wage rates came into force last month. The baseline for people aged 25 and over increased to £7.50 per hour, while a new category was created for those aged 21-24, at £7.20. Until now, the same minimum rate applied to everyone aged 21 and over.

The minimum for 18- to 20-year-olds is £6.85 and those aged 16 and 17 have a minimum of £5.70 an hour.

Mr Shimmins asked Economic Development Minister Laurence Skelly what plans he had to increase minimum wage rates in the Isle of Man to above minimum wage and national living wage rates in the UK.

Mr Skelly said: ’The increase in the headline rate of the minimum wage amounts to an increase of over 7 per cent on the previous rate and represents a significant rise for some of the lowest paid workers on the island.

’It sends a clear message from government that work should pay, and affirms our Programme for Government commitment to continue to develop an inclusive and caring society.

’The new rate also now matches that of the national living wage recently established in the United Kingdom.’

The UK has a target for 2020 that the national living wage will reach 60 per cent of median earnings and it is expected that the UK will increase the headline rate on a yearly basis until it meets that level.

The minister said: ’We certainly intend that the top rate of minimum wage in the Isle of Man will not fall below that of the UK.’

He said the Minimum Wage Act required the DED and Treasury to consult the Minimum Wage Committee before making changes to the main rate.

He added that he was amending the committee’s terms of reference, which would enable it to consider wider evidence before submitting recommendations.

Earlier this year Tynwald agreed to establish a voluntary living wage, with Cabinet Office due to report back in October.

Chris Robertshaw (Douglas East) called for businesses to be given sufficient notice of minimum wage increases, so they could prepare accordingly. He said the ’late advice’ over this year’s increase - approved in April - had caused problems for some firms.