Half of all minimum wage employees work in the accommodation, food and retail sectors, which have experienced widespread business closures due to the Covid-19 crisis
A new ESRI study provides an overview of minimum wage policy in Ireland over the last twenty years and reviews the evidence on the labour market impacts of recent changes to the Irish minimum wage.
Minimum wage increases in Ireland have not led to job losses among minimum wage workers, but have resulted in some reductions in hours worked. The 2016 increase in the minimum wage led to reductions in wage inequality in Ireland and the minimum wage has been shown to be particularly important in keeping wage inequality low during a recession.
For many employees, the minimum wage acts as a stepping-stone to higher pay. However, others stay on the minimum wage for longer periods of time and are reliant on statutory increases in the minimum wage to boost their income.
Approximately eight per cent of employees are on the minimum wage in Ireland. Compared to all employees, minimum wage employees are more likely to be women, work part-time and be in the 15 to 24 years age bracket.
More than half of minimum wage employees in Ireland work in the retail, accommodation and food sectors. These sectors have experienced widespread business closures due to the Covid-19 crisis.
Those who lost their job can claim the Pandemic Unemployment Payment, consisting of a flat rate of €350 per week. Minimum wage employees, on average, work relatively few hours. This means the Pandemic Unemployment Payment, as it currently stands, is higher than the gross weekly wage of most minimum wage employees.
Dr Paul Redmond, author of the report, said:
“The Covid-19 crisis has led to widespread disruption in the retail, accommodation and food sectors. These sectors alone employ half of all minimum wage workers in Ireland, meaning low-paid workers may be disproportionately impacted by job losses in these areas.”
“The key policy question over the next 12 months will be whether the minimum wage should be increased, decreased or remain the same. The evidence shows that minimum wage changes have little effect on employment. We also know that changes to the minimum wage impact wage inequality. These are issues that will need to be considered by the Low Pay Commission and policy makers in the coming months.”
A webinar, which discussed the findings of the report, took place on 7 May 2020. You can view the video below.