[Ireland] Minimum wage needs ‘significant changes’ to meet 2026 target

The chair of Ireland’s Low Pay Commission has said that “significant changes” must be made to the minimum wage before 2026 if the Government is to reach its target of benchmarking it to 60 per cent of the hourly median wage, Irish Examiner reports.

In November 2022, the Government agreed to a plan to replace the minimum wage with a national living wage by January 2026. It has asked the commission to make recommendations to achieve this.

The national living wage is to be set at 60 per cent of the hourly median wage, which in 2023 would be €13.10. The minimum wage of €11.30 per hour only represented 51.8 per cent of the median hourly wage of €21.28.

In last week’s budget, the Government reportedly announced that it was increasing the minimum wage to €12.70 following recommendations from the commission; a hike of 12.4 per cent. 

Addressing the Oireachtas Enterprise Committee, Ultan Courtney - chair of the commission - said the 2024 minimum wage increase to €12.70 will now “represent 55.1 per cent of median wages in 2024”.

"The gap from 51.8 per cent of medium hourly earnings to 60 per cent by 2026 in the space of three years, requires significant changes in the minimum wage.” 

He said that the commission has discretion to recommend the speeding up or slowing down of the transition to the 60 per cent benchmark.

Mr Courtney added that Ireland’s strong economic growth and very low levels of unemployment meant that it could recommend the large increase seen in the budget last week.

The commission reportedly estimates that the new minimum wage will see a worker on that rate earning €54.60 more on a 39-hour week or more than €2,800 a year.

Business groups, whose members will see their wage bill increase next year as a result of the move, criticised the minimum wage rise. Many claim that prices will have to be raised to account for this and concerns were expressed that any increases may result in job losses.

Mr Courtney reportedly said that the commission is legislatively required to consider whether a proposal will have an impact on unemployment.

However, he said that through research conducted with the Economic and Social Research Institute, the commission has found that the increase in the national minimum wage has “little effect on employment”.

The commission estimates that approximately 140,000 people are currently earning at or below the minimum wage.

The commission is conducting research into the sub-minimum wage which allows employers to give lower pay to those below a certain age. 

Under the current system, people aged 19 can be paid at 90 per cent of the minimum wage or €10.17, people aged 18 can be paid at 80 per cent or €9.04 and all those under 18 can be paid at 70 per cent or €7.91.

Source: Irish Examiner

(Quotes via original reporting)

The chair of Ireland’s Low Pay Commission has said that “significant changes” must be made to the minimum wage before 2026 if the Government is to reach its target of benchmarking it to 60 per cent of the hourly median wage, Irish Examiner reports.

In November 2022, the Government agreed to a plan to replace the minimum wage with a national living wage by January 2026. It has asked the commission to make recommendations to achieve this.

The national living wage is to be set at 60 per cent of the hourly median wage, which in 2023 would be €13.10. The minimum wage of €11.30 per hour only represented 51.8 per cent of the median hourly wage of €21.28.

In last week’s budget, the Government reportedly announced that it was increasing the minimum wage to €12.70 following recommendations from the commission; a hike of 12.4 per cent. 

Addressing the Oireachtas Enterprise Committee, Ultan Courtney - chair of the commission - said the 2024 minimum wage increase to €12.70 will now “represent 55.1 per cent of median wages in 2024”.

"The gap from 51.8 per cent of medium hourly earnings to 60 per cent by 2026 in the space of three years, requires significant changes in the minimum wage.” 

He said that the commission has discretion to recommend the speeding up or slowing down of the transition to the 60 per cent benchmark.

Mr Courtney added that Ireland’s strong economic growth and very low levels of unemployment meant that it could recommend the large increase seen in the budget last week.

The commission reportedly estimates that the new minimum wage will see a worker on that rate earning €54.60 more on a 39-hour week or more than €2,800 a year.

Business groups, whose members will see their wage bill increase next year as a result of the move, criticised the minimum wage rise. Many claim that prices will have to be raised to account for this and concerns were expressed that any increases may result in job losses.

Mr Courtney reportedly said that the commission is legislatively required to consider whether a proposal will have an impact on unemployment.

However, he said that through research conducted with the Economic and Social Research Institute, the commission has found that the increase in the national minimum wage has “little effect on employment”.

The commission estimates that approximately 140,000 people are currently earning at or below the minimum wage.

The commission is conducting research into the sub-minimum wage which allows employers to give lower pay to those below a certain age. 

Under the current system, people aged 19 can be paid at 90 per cent of the minimum wage or €10.17, people aged 18 can be paid at 80 per cent or €9.04 and all those under 18 can be paid at 70 per cent or €7.91.

Source: Irish Examiner

(Quotes via original reporting)