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The minimum wage hike will be the first step towards introducing the living wage, said Varadkar. Alamy Stock Photo
wage hike

Low Pay Commission recommendation for minimum wage increase to go to Cabinet in September

The current national minimum wage stands at €10.50 per hour.

THE LOW PAY Commission has recommended that the minimum wage should be increased, Tánaiste Leo Varadkar has confirmed to The Journal. 

In an exclusive interview, the Minister for Enterprise, Trade and Employment said:

“I have a recommendation from the Low Pay Commission and they are recommending that minimum wage be increased. I’ll bring that recommendation to Cabinet in September.”

Since 1 January 2022, the national minimum wage is €10.50 per hour. The last increase to the hourly rate was 30 cent.

In the past, hikes in the minimum wage have been between 10c and 60c, but it is expected the increase to be announced shortly could be higher.

Government sources have confirmed that it is a “decent jump” in the current rate.

Typically, minimum wage increases kick in on the first day in January.

While a number of cost-of-living measures are due to be brought in before Christmas, it is understood there are no plans to introduce the new minimum wage before 2023, as businesses will need time to plan for it.  

“I think what we’ll need is an increase in the minimum wage, you know, even separate from the phasing in of the living wage. There will have to be an increase in the minimum wage.

“I think it is needed, because the cost of living has gone up by a lot. And we know those most affected are those in lowest income,” Varadkar told The Journal.

The medium term proposal is to bring in a ‘living wage‘, pitched at 60% of median earnings, said Varadkar. 

“That’s to be phased in over four years. I’d like next year to be the first year. I suppose it might be described that the minimum wage increase that’s going to happen will be the first step in doing that,” he said. 

Varadkar said the increase is in line with their proposals to to move towards a living wage, stating he’d like to see that plan introduced “sooner rather than later”.

“If it can be speeded up, I’d be in favour of that,” he said.

However, he said Government also needs to keep in mind the impact of the costs on businesses.

“Businesses will now be facing wage increases, as well as rising energy costs, coupled alongside other initiatives such as the new statutory sick pay law and auto-enrollment in a pension scheme.

“We don’t want to load new additional costs on business so quickly that businesses end up having to cut people’s hours or even that people go or even close down,” he said.

“Because the most important workers rights is the right to work. And if you do things that are counterproductive, you’re helping nobody,” added Varadkar.

Calls for €15 per hour

Reacting to the news that the minimum wage is set to rise, People Before Profit TD Richard Boyd Barrett said the hourly rate should be raised to €15 per hour. 

“With the rocketing cost of living and rents and an already very high proportion of workers on low pay, even before the cost of living hikes, anything less than €15 euro per hour is simply not a living wage.

“The government promised a pay back for workers after Covid. A €15 per hour minimum wage and pay rises in line with inflation is the least workers should expect,” he told The Journal.

Labour’s Marie Sherlock said her party is looking for a minimum €1 increase in the national minimum wage. 

She said that a €1 increase would be a very small part of what needs to be done for low wage workers, who she said are “incapable of withstanding the savage increases in the cost of living at this point in time”. 

Sherlock said a wage increase is needed, but targeted measures regarding energy bills and other measures also need to be implemented.

Social Democrat’s co-leader Catherine Murphy said the cost-of-living crisis has been most difficult for those on the lowest incomes, many of whom are at risk of falling into poverty.

“Instead of a minimum wage, we need to move towards a living wage – to provide a minimum floor of decency and dignity for workers. An updated living wage figure will be available next month from the Living Wage Technical Group, prior to the Budget, and government must incorporate this in their final decision,” she said.

Dr Laura Bambrick, ICTU Head of Social Policy and Employment Affairs said: 

Germany announced in July they are increasing their National Minimum Wage to a Living Wage in October – a 25% increase on their lowest hourly pay rate to €12.
They are going to do in four months what our Government is planning to do over a four-year period. Low-wage essential workers can’t afford and shouldn’t be told to wait till 2026 for an adequate wage.

ISME, the group that represents small and medium businesses, told this website that “it is a matter of great frustration for the SME community that Government thinks the cost-of-living crisis can be addressed by increasing the national minimum wage. It cannot”.

“Increasing the national minimum wage makes no material difference to the living standards of those affected, but does increase the cost of unskilled or low-skilled labour,” it said, citing a ESRI report this year, which ISME says shows it only results in workers working fewer hours.

“The cost-of-living crisis cannot be outsourced to SMEs via increased wages… Raising what is already the third highest national minimum wage in the EU is not the answer,” it said. 

The group has also has raised concerns with Government is its recent budget submission

It stated in the document that Ireland has the second highest national minimum wage in Europe, describing a hike in the rate as “a political cop-out from the more difficult issue of controlling the cost of living in Ireland”. 

The group states that successive governments have abdicated responsibility to the private sector to deal with rising costs, stating that Ireland is the second most expensive country to live in within the EU.

In its submission, the group speaks about the cost of housing and lack of affordability, stating: “It is not in the gift of most SME employers to increase wages in line with these increases, and the State will have to intervene to provide adequate social housing at affordable prices.”

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