RECENT INCREASES TO the minimum wage in Ireland did not lead to low-paid workers losing their jobs, despite concerns aired, new ESRI research found – but an increase in younger employees on the lower rate of minimum wage shows employers may be offsetting some of their labour costs.

The minimum wage in Ireland increased every year from 2016 to 2025.

From 1 January 2025, Ireland’s national minimum wage increased to €13.50 per hour for employees aged 20 and over, up from €12.70 in 2024. It increased again in January of this year to €14.15 for employees aged 20 and over.

In 2016, national minimum wage for an experienced adult worker was €9.15.

For people under the age of 20, however, there is different bands: those aged 18 are entitled to 80% of the national minimum wage for people over 20, and those aged 19 are entitled to 90%. Those under 18 are entitled to 70%.

This translates to €12.74 for 19 year olds, €11.32 for 18 year olds, and €9.90 for those under 18 per the 2026 minimum wage.

There have been bands for younger and inexperienced workers in place since 2000 but these were abolished and replaced by set rates by age in 2019. 

In 2019, less than 20% of employees under 20 were paid a sub-minimum wage. However, last year this figure had increased to 30%.

This does not mean there are more younger people in employment, but that employers are increasingly opting to pay the sub-minimum wage to those eligible. 

The youth unemployment rate is trending steadily upwards. It increased for eight months in a row in the period to January 2026, rising from just under 12% in May 2025 (although it must be noted that this report covers only the six months following the minimum wage increase in 2025).

“It is possible that employers are increasingly using sub-minimum youth wage rates to keep labour costs low as the minimum wage gets higher,” the ESRI noted in its report. 

“If sub-minimum youth wage employees are, to some degree, substitutes for full-rate adult minimum wage employees, then employers may become increasingly reliant on sub-minimum youth wage employees to reduce their wage bill as the minimum wage goes up, thereby creating strong incentives to retain such workers,” it explained in its conclusions.

It said an additional explanation may relate to the tightening of the labour market in certain low-paid sectors following the pandemic.

“In the presence of recruitment challenges and staff shortages in the hospitality sector, employers may be incentivised to retain younger staff members, even in the presence of increased wage entitlements.”

No impact on employment

The report’s headline findings were that notable increases in minimum wage did not result in lower-paid workers losing their jobs.

Concerns were raised that the wage increases could lead lower paid workers to lose their jobs if employers reduced their workforce due to higher labour costs. It was also highlighted that some smaller businesses may not be able to sustain the increase. 

The new ESRI study examined whether minimum wage employees became jobless in the six-month period following a minimum wage increase, and found there was no evidence to support this.

Minimum wage employees are generally more likely to become unemployed than higher paid workers, but this likelihood did not increase with higher rates of minimum pay, it said.

The increase in minimum wage focused on in the study was the jump from the 2024 rate to the 2025 rate, a period in which the study acknowledges showed strong economic growth and low employment in Ireland. Were it to be carried out during a weaker economically performing period, results may have varied, the authors caveated.

It also examined whether employees who “age out” of sub-minimum wage brackets and into the national minimum wage for those aged 20 and over were more likely to face employment, and found this was not the case.

One of the authors of the report, Dr Paul Redmond, said it is “important to monitor whether increases to the minimum wage result in negative employment effects for low paid workers”, which it did not find.