The Low Pay Commission has recommended that the minimum wage be increased by 10cent bringing the national minimum wage to €9.25 per hour. This is an increase of 1.1% for an experienced adult worker. The primary aim of the proposed increase is to provide an incentive to work. The Low Pay Commission are aiming to have a national minimum wage that is both fair and sustainable. Although the Irish economy is continuing to grow and strengthen the recovery is not yet evident in all regions. In 2015 real GDP in Ireland grew by 7.8 percent, making it the fastest growing economy in the EU and Real GNP grew by 5.7 percent over the same period. The recession which began in 2008 and the subsequent upturn in economic activity since 2013. Further economic growth is predicted. It is important that changes to the national minimum wage are on an incremental basis to reduce and avoid negative impacts on Ireland’s competitiveness. As mentioned previously Ireland is continuing to grow and recover from one of the worst economic downturns in its history, and while it is looking positive it is important that we consider the other risk factors, one of which is the UK’s decision to leave the European Union. Although this may affect our economic competitiveness, worldwide research shows moderate adjustments to the minimum wage do not have a detrimental impact on jobs but can lead to higher levels of employee engagement which in turn leads to increased productivity, higher retention levels, and lower levels of absenteeism. When making the recommendation for an increase in the national minimum wage the LPC took the following into consideration:
- CSO data shows that both multinationals and non-multi-national enterprise sectors exhibited positive growth in 2014 and exceeded previous peak Gross Value Added values.
- The initial post-2012 recovery was export-driven, whereas domestic consumption and investment are now making a much stronger contribution towards growth.
- There are significant risks to Irish economic performance in the international economic environment. In particular the decision by the United Kingdom to exit from the European Union will have a significant, unquantifiable, impact over the coming months and years. Some regions and sectors are particularly exposed to the volatility of sterling and will be affected disproportionately.
- Employment is growing but unemployment is still too high.
- Prices are stable or marginally lower over the last 12 months and inflation is projected to remain low.
- Growth in average annual hourly earnings in the year to Quarter 1 2016 was 0.7
Percent. The increase in earnings was 1.7 percent in the wholesale and retail sector and 0.4 percent in the hospitality sector.
- Data is not yet available to assess the impact of the increase of 50 cent in the minimum wage from 1 January, 2016 in terms of employment or on hours worked.
The report relies on data available in the period up to 1 July, 2016. The National Minimum Wage does not apply to the following:
- A person who a close relative of the employer (i.e. the spouse, civil partner, father, mother, grandfather, grandmother, step-father, step-mother, son, daughter, step-son, step-daughter, grandson, grand-daughter, brother, sister, half-brother or half-sister of an employer)
- A person taking part in a statutory apprenticeship (e.g. an apprentice printer, plumber, carpenter/joiner, electrician etc), or to
- non-commercial activity or work engaged in by prisoners under the supervision of the governor or person in charge of the prison concerned
It is important to understand that increasing the National Minimum Wage is a way to help tackle poverty and provides a sense of safety to the more vulnerable employees who may have not been paid properly for the work they carried out, as employers cannot be underpaid or employers will be in breach of legislation.
