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'Low wage trap': Part-time employees and non-Irish nationals more likely to stay on minimum wage

Those on minimum wage are more likely to transition to higher pay than remain on the minimum wage, a study showed.

Image: Shutterstock/KOKHAN YARYNA

PART-TIME EMPLOYEES, those with low levels of education, non-Irish nationals and those on temporary contracts were more likely to stay on the minimum wage, according to a new ESRI study funded by the Low Pay Commission.

The study also found that minimum wage workers are more likely to transition to higher pay than remain on the minimum wage.

Over a nine month period, approximately 30% of minimum wage employees transitioned to higher pay, with 18% staying on the minimum wage. The vast majority of transitions to higher paid employment are achieved through wage progression within the employee’s current job, as opposed to a job change.

The remaining 52% experienced some other type of labour market transition either from or to higher pay, unemployment or inactivity.

Minimum wage employees were also found to be more likely to transition to unemployment or inactivity compared to high paid workers.

After controlling for a range of personal, education and work related characteristics, minimum wage employees are found to be up to four percentage points more likely to transition to unemployment or inactivity compared to high paid workers.

“While minimum wage employment acts as a stepping stone to higher pay for many employees, it is important to note that it can also represent a low wage trap for certain types of workers and is also associated with a greater likelihood of becoming unemployed,” said Dr Paul Redmond, an author of the report.

Yesterday, the CSO released figures that showed the monthly unemployment rate for September was 5.4%, which Taoiseach Leo Varadkar said was a “10-year low”.

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