The Low Pay Commission published their National Minimum Wage report this week, 18 July 2017.
The annual report often informs budgetary adjustments in the national minimum wage rate in Ireland. In this report, the Commission have proposed a €0.30 increase in the national minimum wage. This would bring it up to €9.55 per hour; this gives a total of €12 more a week for a 40 hour week.
This figure is based on several factors, including “risks to the economy and international comparative research”.[i] At €9.55, Ireland would surpass Belgium and become the second-highest EU country by minimum wage. Six out of the nine members of the Commission supported this increase.
The Programme for Government committed to bringing the national minimum wage up to €10.50 per hour, which would be the highest in Europe. Speaking at the release of the report, An Taoiseach Leo Varadkar TD said:
“The Government wants everyone to have an opportunity to share in the ongoing recovery. Increasing the minimum wage will help to achieve that goal by providing an absolute minimum for earnings. We intend to formally respond to the Report this autumn, including its recommendations regarding employers’ PRSI, in the context of Budget 2018.”
The recommendation mentioned above is for a reduction in Employers’ PRSI from 10.75% to 8.5% on weekly earnings of €376. The Commission described the sudden increase in this rate as an “anomaly”.[ii] All nine members of the Commission were in agreement regarding this issue.
Their third recommendation is that provisions should be made in line with these changes. For example, the Board and Lodging thresholds now stand thus:
- €54.13 for full board and lodgings per week, or €7.73 per day
- €32.14 for full board only per week, or €4.60 per day
- €21.85 for lodgings only per week, or €3.14 per day
There is no increase in the amount deductible by employers for board and lodging this year. This recommendation was welcomed by SIPTU. SIPTU’s Sector Organiser Ed Kenny, who made submissions to the Commission on this point, commented:
“Any increase in these costs would only amount to a decrease in take home pay for some of the lowest paid workers in our economy, many of whom on average earn only approximately €400 a week.”[iii]
The Commission also addressed concerns about disparities in wage and living costs dependent on region, which raised after the publication of last year’s report. The Commission, in their introduction, noted that
“On balance… [they] believe that regional rates would prove unduly complex and could not be targeted sufficiently (e.g. people often live and work in different areas, and have different housing costs).”
There has been some criticism of the recommendations of the Commission. Following the announcement, a press release was issued by Ibec, the group that represents Irish business. They hold the position that there is “no justification for national minimum wage increase”, as Ireland already has one of the highest in Europe.
The Members of the Low Pay Commission are:
- Dr Donal de Buitléir – Chairperson – Director of PublicPolicy.ie
- Vincent Jennings – CEO Convenience Stores and Newsagents Association
- Patricia King – General Secretary of ICTU
- Gerry Light – Assistant General Secretary, Mandate Trade Union
- Caroline McEnery Director – The HR Suite; HR & Business Solutions
- Edel McGinley – Director, Migrant Rights Centre Ireland
- Mary Mosse – Former lecturer in Economics, School of Business, Waterford Institute of Technology
- Tom Noonan – Chief Executive, The Maxol Group, former President of Ibec, 2008–2010.
- Prof Donal O’Neill – Dept. of Economics, Finance & Accountancy, NUI, Maynooth
You can view the full report here.
[ii] Low Pay Commission Report 2017, p.3, available here.