Minimum wage employees in Ireland are more likely to work in sectors that have been most affected by the COVID-19 pandemic

Currently, 21 of the 27 EU member states, along with the United Kingdom, have a statutory minimum wage. After Luxembourg, Ireland has the second-highest minimum wage rate. However, once differences in the cost of living are accounted for, the minimum wage in Ireland is the seventh-highest, behind Luxembourg, Germany, the Netherlands, Belgium, the United Kingdom and France. 

Using data for 2017 and 2018, this report provides a comparative analysis of minimum wage employment in Ireland, relative to a selection of other European countries with a statutory minimum wage. We estimate that just under 10 per cent of employees in Ireland were on the minimum wage during this time. This compares to an average incidence of 10.5 per cent among the countries studied, ranging from a high of almost 16 per cent in Portugal, to just 2 per cent in Belgium. 

Being young, having low levels of education and being a non-national are associated with a higher likelihood of minimum wage employment across Europe. In some countries, women are heavily over-represented among minimum wage workers. For example, in Belgium, Germany, France, Latvia, Netherlands, Portugal and the United Kingdom, between 60-70 per cent (approximately) of minimum wage employees are women. However, in Ireland, the gender composition of minimum wage workers during this period was roughly equal. 

In Ireland, 43 per cent of minimum wage workers were employed in the accommodation, food, wholesale or retail sectors, which is higher than any of the other countries studied. These sectors experienced the greatest employment disruption due to the COVID-19 pandemic. Therefore, minimum wage workers in Ireland are likely to have been disproportionately impacted compared to their European counterparts. However, the percentage of minimum wage workers that are at risk of poverty in Ireland during 2017 and 2018 (at 11 per cent), was the lowest among all countries studied. This is consistent with previous work that shows many minimum wage employees are located in high-income households.  

After controlling for other factors, minimum wage employees in most (9 out of 14) countries are shown to be less satisfied in their job compared to higher-paid workers. The estimates range from less than five percentage points in Estonia and Portugal, to approximately ten percentage points in Ireland, Belgium, Hungary and Latvia. 

Dr Paul Redmond, an author of the report said:

“It is important to understand how minimum wages operate within labour markets, and the features of minimum wage employment that are particularly relevant to Ireland. Our research shows that minimum wage workers in Ireland may be particularly exposed to the impacts of the COVID-19 pandemic, as they are more likely to work in sectors such as accommodation, food, wholesale and retail. However, minimum wage employees in Ireland are less likely to be at risk of poverty compared to their European counterparts, as they are often located in high-income households.”  

 Dr Donal de Buitleir, Chairman of the Low Pay Commission said:

“I warmly welcome this Report which increases our understanding of the serious impact of the COVID-19 pandemic  on minimum wage workers in Ireland.  It shows that of the countries studied we have the lowest percentage of minimum wage workers that are at risk of poverty and that, unlike other member states where women are heavily over-represented among minimum wage workers, in Ireland the gender composition was roughly 50/50. However, a disproportionately large number are shown to be less satisfied in their job compared to higher-paid workers.”