When the government reconvenes next month, it will be contemplating a potential increase to the national minimum wage from €12.70 to €13.50 per hour during the budgetary considerations. This follows a recommendation from the Low Pay Commission earlier in the summer, suggesting an hourly surge of 80 cents.
A government agreement could result in a 6.3% wage increase for the lowest paid workers, effective from January 1st, elevating a standard 39-hour week’s earnings from €495.30 to €526.50. Despite this being greater than this year’s anticipated inflation rate of around 2.4% and the average private sector pay increases of roughly 4%, it still falls short of trade union expectations.
In Ireland, roughly 165,000 individuals, primarily women, younger employees and disabled persons, primarily within the hospitality, retail, and services industry, receive the minimum wage. Furthermore, the established rate has an extended influence on numerous other employees whose remuneration is unofficially tied to the national minimum wage.
Peter Burke, the Minister for Enterprise, Trade and Employment, reassured on Thursday that any future augmentation in the minimum wage would be executed in a “sustainable” manner, paired with support for small and medium-sized businesses during budgetary planning. He dismissed earlier speculations suggesting a potential leap in the region of €1 to €1.20 during his RTÉ radio interview, arguing against a rise on this scale.
Whilst the department and Mr Burke committed that the commission’s recommendation will be taken into account during the budgetary review, rumours hint at the potential for additional review of the impacts on the SME sector. This follows a past instance where such an approach was adopted in response to the commission’s proposal to eliminate the reduced minimum wage rates for under 20s.
The augmented national minimum wage seen last year, of €1.40, an upshift of 12.4 per cent, was commonly viewed as an initial step towards the much-publicised transition to a Living Wage. This wage was set to consist of 60 per cent of mean gross earnings throughout the national economy by 2026. To keep this transition progressing, a further significant increase in the wage was projected for this year. However, rising resistance from the SME sector against cost surges believed to be government-related, repeated assurances by Mr Burke of acknowledging their worries, and the nearing elections all contributed to tempering these expectations.
Debates have been intense regarding the calculation of 60 per cent of median earnings, with Ibec contending the national minimum wage already mirrors it more closely than unionists argue.
Paschal Donohoe, Minister for Public Expenditure, declared on Thursday that previous and current administrations had endorsed the proposals of the Low Pay Commission pertaining to the national minimum wage. He stated that the decision was made to ensure individuals on lower earnings also benefit from an expanding economy, experiencing incremented wages and consequently, escalating living standards.
Donohoe lauded the Low Pay Commission, noting its essential role in delivering impartial data to the government for key minimum wage decisions. He added that they will need to thoroughly scrutinise the report due to the escalating challenges that numerous small businesses are presently grappling with, including job retention, viability, and business continuity. Donohoe confirmed that the government will take all these factors into serious consideration in the forthcoming weeks.