The States have agreed that Guernsey’s minimum wage will increase to £12.60 per hour (for age 18 and up) from 1st October 2025. That is £22,932 p.a., assuming a standard 35-hour week.
Whereas in Jersey the minimum wage is already £13 per hour.
Potential Positive Effects
This increase could result in the following long-term benefits to both employee and employer:
· Reduced staff turnover and improved morale as employees receive better pay, in a buoyant local employment market where many people regularly move jobs, sometimes to increase salary.
· Increased local consumer spending, which could benefit retail and service sectors if higher wages lead to greater disposable income.
Rising Labour Costs
As a small commercial business, we can also see the other side of this issue. For the smaller organisations, particularly those in hospitality, retail, service industries, care services, and agriculture, wages often represent a large share of operating expenses. This increase in the minimum wage will raise monthly payroll costs, squeezing margins and leading to higher operational costs, potentially leading to increased prices for goods and services.
The Confederation of Guernsey Industry has previously indicated that businesses may have no option but to pass on these additional costs to customers. Alternatively, organisations may be forced to reduce staff levels or working hours, potentially impacting service quality or business operating hours.
Wage Compression Issues
This minimum wage increase could also lead to the narrowing of pay differentials between lower-tier and mid-tier workers, potentially causing dissatisfaction among more experienced employees. Businesses may therefore need to increase wages across the board, further escalating payroll expenses.
So it’s good news for the worker, but could be a real concern financially for some employers.
