An increase of more than 12 per cent in the minimum wage for next year, more than twice the predicted rate of inflation for 2023, is to be recommended by the Low Pay Commission
If agreed by Government in the autumn, the recommendation, which is for an increase of €1.40 an hour on the current rate of €11.30, taking it to €12.70, will mean someone on the minimum wage who works a 39 hour week would earn an additional €54.60 per week from the start of next year.
The recommended increase is well above the 5.3 per cent headline inflation rate predicted for 2023 by the Central Bank in its most recent quarterly bulletin. It is also substantially higher than the 7.6 per cent recommended by the commission and adopted last year which took the minimum wage from €10.50 to €11.30 on January 1st.
The latest increase will have to be approved by Cabinet in the autumn but would be expected to receive Government support.
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The commission had previously flagged the prospect of higher than inflation increases being recommended over the next couple of years as it seeks to adjust the minimum wage upwards so as to meet the Government’s objective of having a new living wage. This would be based on 60 per cent of median gross earnings across the economy, and would be in place by 2026. The commission suggested last year this formula would have given rise to a living wage figure of €13.10 in 2023.
Around 165,000 people, a group disproportionately made up of women, people with disabilities, young people and migrant workers, will be directly impacted by any increase.
Thousands more will benefit from knock-on effects where their pay rates are linked to the minimum wage.
Those aged 17, 18 and 19 currently receive 70, 80 and 90 per cent respectively of the full rate. If the increase to be recommended is implemented in full the rate for a 17-year-old would increase from €7.91 per hour in January 1st to €8.89, with 18-year-olds getting €10.16 per hour and 19-year-olds receiving €11.43.
This system of reduced rates for under-20s is currently the subject of a review process being carried out by the Low Pay Commission, with submissions currently being accepted.
The Government-appointed commission is made up of a mix of academics and representatives of employers and the trade union movement. Last year its chair, Ultan Courtney caused some surprise when he told an Oireachtas committee that the commission had received submissions from a number of workers arguing against larger rises in the minimum wage rate on the basis that it might threaten their future employment.
In May the Irish Congress of Trade Unions had argued in its submission for an increase of €2 in 2024 with a further €2 increase to follow in 2025. It argued that “increases in 2021 and 2022 were well behind inflation, hence the need for a more meaningful increase now”.
Announcing the Government’s decision to implement last year’s recommendation, then tánaiste Leo Vardkar said: “We want to reward work and ensure that work pays more. Minimum wage workers are among the hardest working people in Ireland and deserve to be paid more, particularly at a time or rising prices. I want to move from a minimum wage to a living wage so that work pays more.”
