Some 6,500 workers are being paid less than minimum wage, ESRI study finds

While certain categories of younger workers in the Republic can legally be paid at sub-minimum wage rates, the majority receive higher rates of pay, a new study has indicated.

However, the research indicated that some 6,500 workers were currently earning less than the minimum wage for “other reasons” and that that may include “individuals being paid below minimum wage illegally”.

The study conducted by the Economic and Social Research Institute (ESRI) examined the prevalence and characteristics of sub-minimum wage employment in the Republic.

It found that just a quarter of all employees aged 15–19, equating to 15,000 individuals, were “actually paid” at rates below the minimum wage.

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The current minimum wage is €11.30 per hour but it is due to rise to €12.70 per hour from January 1st next on foot of a recommendation from the Low Pay Commission.

The State’s minimum wage legislation allows employers to pay young workers at a sub-minimum youth rate.

Those aged below 18 years can be paid 70 per cent of the full, adult minimum wage rate, those aged 18 years can be paid 80 per cent of the full rate, while those aged 19 years can be paid 90 per cent of the full rate.

There has been criticism that these sub-minimum rates unfairly penalise younger workers and fail to ensure a decent standard of living for the workers in question.

The ESRI’s study found, however, that just 25 per cent of workers aged 15–19 were paid at these sub-minimum rates with the remaining three-quarters earning a higher wage.

“Therefore, very few employees in Ireland are on a sub-minimum youth rate. Just one in every 140 employees earns a sub-minimum youth rate. This is equivalent to approximately 15,000 individuals,” the ESRI said.

The research also indicated that just over half (55 per cent) of sub-minimum youth rate employees were women and that 77 per cent work in either the accommodation, food or retail sectors.

About 80 per cent of sub-minimum youth-rate workers classified themselves as students, the study noted.

The legislation here also exempts apprentices, people employed by a close relative, and prisoners involved in non-commercial work from being paid minimum wage.

About 1,500 employees stated they were paid below the minimum wage due to being employed by a relative, while 6,500 indicated that they were apprentices and therefore paid below the statutory minimum rate.

The ESRI study indicated that a further 6,500 employees in the Republic reported earning less than the minimum wage for “other reasons”.

“This other category potentially captures individuals being paid below minimum wage illegally,” the think tank said, while noting it had no data on the number of prisoners earning below the minimum wage.

The report’s author, Paul Redmond, said sub-minimum youth rates in Ireland have received a lot of attention in recent months as they have been criticised by some policymakers as being too low to allow a decent standard of living for young people.

“Our research shows that very few employees are on a sub-minimum youth rate. Most young people who could legally be paid a sub-minimum youth rate are actually on higher pay,” he said. “Of those that are on sub-minimum youth rates, the majority work in either accommodation, food or retail and most are students.”