The Committee for Employment & Social Security would like to hear people's views on changes to the Minimum Wage & Associated Rates by 2 April 2024.

The Committee for Employment & Social Security ('the Committee') is responsible for setting the Minimum Wage & Associated Rates for Guernsey. The Committee proposes these rates on an annual basis, based on a strategic medium-term plan, and consults with relevant stakeholders before taking a Policy Letter to the States' Assembly to agree the rates.

A strategic medium-term plan is developed by the Committee every few years to give some certainty to employers and employees regarding the future direction of minimum wage policy. The current medium-term plan is due to finish with the final rate being implemented in October 2024; a new plan is therefore being proposed for the period from 2025 - 2030.

The Committee is seeking feedback on the proposed new medium-term plan from employment and labour organisations (including trade unions), employers' associations, business groups, charities and representatives of different nationality groups. The Committee is also interested in receiving feedback from any interested member of the public.

• Why is the Committee consulting?

  • The Committee is legally obliged to consult with relevant stakeholders when proposing changes to the Minimum Wage. Quite apart from meeting that obligation, the Committee is keen to understand how proposals might impact businesses, employees and the economy generally.
  • This consultation questionnaire provides background information on the Minimum Wage in Guernsey, the current policy in respect of increasing Minimum Wage Rates and what the Committee is considering proposing to the States for the period 2025 to 2030, and why.
  • This consultation also provides an opportunity for the Committee to get feedback on other policy matters related to the Minimum Wage, which will support future policy development.
  • The consultation on the final year of the existing medium-term plan, to increase the Minimum Wage Rate to 60% of median earnings from October 2024, will take place separately in May 2024 with key stakeholders when the median earnings level as at the end of 2023 is published.

• What policy is currently in place?

  • The current Adult Minimum Wage Rate for the period 1 October 2023 to 30 September 2024 is £10.65 per hour.
  • The objective of the current medium-term plan is for the Adult Minimum Wage Rate to increase to 60% of the median earnings level in Guernsey, based on a 40-hour working week, by October 2024. The States' Assembly will need to agree the final increase to apply from 1 October 2024 to achieve the objective of the current plan.
  • The Committee will consult with key stakeholders in May 2024 on the proposed Rate to apply from 1 October 2024 following the publication (in late April 2024) of the median earnings figure as at 31 December 2023. However, by using the most recently published median earnings figure (£40,918 as at 30 September 2023) as a guide, an illustrative hourly rate of £11.80 can be estimated.

• What is being proposed?

  • The Committee proposes that the new plan should continue the existing plan's objective to ensure that the gap between the Island's lowest paid workers and the workforce average does not grow too wide.
  • The Committee is considering proposing to the States that the Adult Minimum Wage Rate should increase by 2030 to 66% of median earnings, based on a 40-hour working week, (i.e. increasing by 1% of median earnings per annum). Please note that this only relates to the Adult Minimum Wage Rate, not the Young Persons' Rate which is discussed later in this paper. The figure of 66% of median earnings would bring Guernsey into line with Jersey and the UK's Minimum Wage rates as a percentage of median earnings.
  • While it is not possible to know what the future Adult Minimum Wage Rates would be under the proposed medium-term plan, it is possible to calculate an illustrative figure for 2030 (in 2024 terms), based on 66% of the most recently published median earnings figure (£40,918 as at 30 September 2023), which would be £13.00 per hour. 
  • The Committee is aware that economic circumstances can change quickly and is therefore proposing to carry out two-yearly reviews of Minimum Wage Rates (in addition to the annual adjustment report that goes to the States' Assembly). This will be done so that checks can be made during the lifetime of the plan to ensure that the policy principles are being followed, and that rates are approaching alignment with other jurisdictions as intended.
  • If the Committee feels that the 66% target for 2030 is no longer appropriate at any time during the plan due to the economic data available, then changes will be proposed, consulted on, and taken back to the Assembly for debate.
  • To support these reviews, the States of Guernsey will soon be collecting additional employment-related data which will give a much better understanding of how many people are paid at the Minimum Wage Rate, and how many hours they work. It is hoped that the first set of annual data will be available in 2026.

• Why is this being proposed?

  • The Committee is aware that Guernsey has fallen slightly behind similar jurisdictions, such as Jersey and the UK, in its Minimum Wage Rates in recent years. Setting a target to increase the Adult Rate to 66% of median earnings by 2030 would bring Guernsey back into line with these jurisdictions' targets and would reduce the gap between the lowest paid and the workforce average.
  • Guernsey currently has a high Gini co-efficient of 0.4, which (along with Jersey) puts it behind only Turkey, Mexico and Costa Rica in the OECD's countries with highest income inequality. The Gini co-efficient is an indicator used to measure the gap between the lowest and highest income households in a population. It does not directly relate to the relationship between lowest paid and median earnings. However, it does give a general view on income inequality which could be used to strengthen the case for setting a higher Minimum Wage in relation to median earnings. It should also be noted that there are likely a number of factors that contribute to Guernsey's high Gini co-efficient (e.g. there being more very higher earners as a percentage of the workforce compared to other jurisdictions).
  • The current economic situation is challenging - increasing the Minimum Wage Rate will help lower paid workers to meet basic living costs. It should also be noted that the definition of 'low-pay' in the UK (and as used by the OECD) is that which is below two-thirds (i.e. 66%) of median earnings. Increasing the Adult Minimum Wage Rate may also have the advantage of reducing the amount that government spends on welfare benefits.
  • However, wages are a large part of the costs borne by local businesses, and those costs are reflected in the prices that businesses charge for their goods and services. The Committee is therefore aware that an increase in the Minimum Wage has the potential to increase inflation and/or influence the number of people a business can afford to employ, and this needs to be taken into consideration.
     

• What about the Young Persons' Minimum Wage Rate?

  • The current Young Persons' Minimum Wage Rate (ages 16 - 17) for the period 1 October 2023 to 30 September 2024 is £9.65 per hour.
  • The Committee will consult with key stakeholders in May 2024 on the proposed Rate to apply from 1 October 2024 following the publication (in late April 2024) of the median earnings figure as at 31 December 2023. However, by using the most recently published median earnings figure (£40,918 as at 30 September 2023) as a guide, an illustrative hourly rate of £10.60 can be estimated.
  • The Young Persons' Minimum Wage Rate is currently moving towards being set at 90% of the Adult Rate, based on a policy decision made by the States in 2022; this difference was justified by the additional training and supervision that is generally required for younger workers.
  • However, given that Jersey is planning to match its Trainee Rate to its Minimum Wage Rate, the Committee is keen to hear people's views in respect of whether a lower rate for young people is justified or not - a question on this is included in the questionnaire.

• Stakeholder engagement

  • This consultation questionnaire has been sent to employment/labour organisations, employer/business groups, representatives of different nationality groups, States Committees and other relevant bodies. This questionnaire is also available online for anybody to read and complete if they wish. Paper copies are available upon request.

Have your say

The Committee would be grateful if you could consider the information in this paper and complete the questionnaire by 2 April 2024.

You can complete the questionnaire online here.

• Clique aqui para preencher o inquérito em Português
• Klikšķiniet šeit, lai atbildētu uz aptauju latviešu valodā

Alternatively, paper copies of the questionnaire are available at Edward T Wheadon House and Sir Charles Frossard House, or by calling 01481 222885. Completed paper questionnaires should be returned to:

Minimum Wage Consultation
The Office of the Committee for Employment & Social Security
Edward T. Wheadon House
Le Truchot
St Peter Port
Guernsey
GY1 3WH

Alternatively, you can scan your completed questionnaire and e-mail to employmentandsocialsecurity@gov.gg. This e-mail address can also be used if you have any further queries about this consultation.

Organisations wishing to respond in writing, rather than through the questionnaire, should email employmentandsocialsecurity@gov.gg or send a letter to the Office of the Committee for Employment & Social Security at the above postal address.

Confidentiality

Any personal data you give will be processed in accordance with the Data Protection (Bailiwick of Guernsey) Law, 2017. For further information please refer to the Fair Processing Notice of the Committee for Employment & Social Security which may be accessed here.

The responses to this questionnaire will be used to inform the Committee's recommendations to the States of Guernsey concerning any changes to the Minimum Wage & Associated Rates. Unless explicit consent is given, your comments will not be attributable to you but may be sent anonymously to interested parties and/or published anonymously.

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