The government is set to commission an evaluation of the financial implications of eradicating sub-minimum wage salaries for teenagers. This comes following the Low Pay Commission’s (LPC) suggestion to discontinue these discounted rates. The LPC advocates for this change to occur following the commencement of the next year, though it recommends further evaluations at two and four years intervals in order to assess whether the abolition has had a negative effect, particularly on those below 18.
At the moment, 19-year olds must earn a minimum of 90% of the national minimum wage (NMW) of €12.70, equating to €11.43 per hour. 18-year olds are required to receive at least €10.16 per hour, whereas those younger than that must earn at least €8.89 per hour. Teenaged workers affected, the vast majority of whom are employed in the retail or hospitality sectors, are already being paid the complete minimum wage according to a Tuesday LPC report.
According to LPC, this topic is “challenging” and it “necessitates the complete analysis and contemplation of the Government and might need further consultations with stakeholders and legal advice”. In response to the LPC’s report, Peter Burke, the Minister for Enterprise, Trade and Employment, voiced that before moving forward, the government will consider all these factors along with assessing the implications of eradicating the sub-minimum wage on SMEs.
He added, “This is a significant and challenging issue that necessitates a thorough investigation by the government,”. “My department will commission an evaluation of the economic consequences and seek legal counsel regarding the LPC’s recommendations,” he added.
The legal counsel will be needed to scrutinise LPC’s claim that the discounted rates could be opposed to European law under the Adequate Minimum Wage Directive, which is due to be integrated into Irish law by this year’s end. The LPC further explains that any deviation from standard minimum wage rate needs to be influenced by a legitimate social policy target. It advises that its legal counsel has suggested that reduced costs for businesses would not be regarded as a valid reason.
The original text suggests that existing policies designed to deter premature school leaving and inspire employers to offer training to young workers are not meeting their objectives, as evidenced by the sub-minimum rates. Upon the release of the report and the statement released by the Minister, Owen Reidy of the Irish Congress of Trade Unions urges the Government to promptly implement the report’s suggestions.
Reidy argues that the lower minimum wage regulations for young employees conflict with EU standards and legislation. He further asserts that the comprehensive review by The Low Pay Commission, which unanimously recommends the abolition of these regulations for all workers, upholds the Congress’s stance. It is incumbent on the Government to act posthaste.