The Chief Minister said the island has to follow the UK in increasing the minimum wage if we are to expand the working population.

Brewers Heron and Brearley, which also operates Spar shops in the island under its Mannin Retail company, have led the criticism of the increase to £7.50 an hour for over-25s - warning the move could lead to job losses and even businesses closing down.

Sara Richards, chairman of the Chamber of Commerce’s visitor economy committee, echoed those concerns. She said members had decided unanimously to recommend a rate of £7.20 an hour, but added: ’There needs to be an evidence-based reason for departing from that recommendation. That part of the process seems to be entirely missing.’

But Chief Minister Howard Quayle told the Examiner: ’It will be difficult for the Isle of Man to grow the working population while the adult minimum wage is lower than in the UK.

’I appreciate that some businesses have concerns. But government is committed to an inclusive society.

’One challenge of growing the economically active population is to ensure job opportunities must be attractive.’

He said when he entered politics unemployment benefit paid more than a job that paid the minimum wage. Mr Quayle said that was no longer the case and there was now a clear gap ’in favour of hard working people’.

The latest census shows that the core working age population fell by 2,000 between 2011 and 2016, with the biggest drop among the 20-somethings. It’s a concern for government that needs more people to be paying tax to fund public services and pensions.

Mr Quayle pointed out that the increase from £7 an hour to £7.50 was only for over-25s. Those aged 21-24 will see an increase from £7 to £7.20 an hour, while for those aged 18-20, the rate rises to £6.85 and to £5.70 for 16- to 17-year-olds.

There has been criticism of Heron and Brearley’s stance from the Licensed Victuallers’ Association, which represents the majority of the island’s free trade public houses, hotels and eateries.

In a statement it said it welcomes the increase in the minimum wage and believes that the increase is justified in the island.

LVA chairman Andy Saunders said that the LVA accepted there were issues in the hospitality industry at the moment but said the organisation was committed to working along with the government to try to resolve them.

He said: ’We feel that punishing hard-working members of staff and diluting the employment pool by paying below-par wages is definitely not the solution.’