New ESRI research examining sub-minimum wage employment in Ireland finds that, while all young workers aged 15–19 could legally be paid a sub-minimum wage rate, the majority receive higher pay

November 02, 2023

Labour Markets and Skills
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The minimum wage in Ireland in 2023 is €11.30 per hour. However, current legislation allows employers to pay young workers 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.

Sub-minimum youth rates in Ireland have received criticism by policymakers, both nationally and internationally, for being too low to ensure a decent standard of living for young people. As such, reform or abolition of sub-minimum youth rates in Ireland is an area of active policy debate. A new ESRI study funded by the Low Pay Commission examines the incidence and the characteristics of employees paid below the full national minimum wage rate. This research provides evidence on the number of employees, and the type of employees, that could be impacted by any changes made to the sub-minimum youth rates.

Key findings of the study:

  • While all employees aged 15–19 could legally be paid a sub-minimum youth rate, just under one-quarter are actually paid this rate. The remaining three-quarters earn 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.
  • Just over half (55 per cent) of sub-minimum youth rate employees are women and 77 per cent work in either the accommodation, food or retail sectors. Approximately 80 per cent of sub-minimum youth-rate employees classify themselves as students.
  • Legislation in Ireland also exempts apprentices, people employed by a close relative, and prisoners involved in non-commercial work from being paid minimum wage. Therefore, these groups can be paid below the full minimum wage rate. An estimated 1,500 employees state that they are paid below the minimum wage due to being employed by a relative, while an estimated 6,500 indicate that they are apprentices. It is estimated that another 6,500 employees report earning less than minimum wage for “other reasons”. This “other” category potentially captures individuals being paid below minimum wage illegally. We have no data on the number of prisoners earning below the minimum wage.

Dr Paul Redmond, an author of the report 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. Of those that are on sub-minimum youth rates, the majority work in either accommodation, food or retail and most are students.”

Ultan Courtney, Chairperson of the Low Pay Commission, commented:

“I welcome the publication of this high-quality research on the incidence of subminimum, or youth rates of the National Minimum Wage. This work was conducted by ESRI and funded by the Low Pay Commission under the terms of our Research Partnership Agreement. The Low Pay Commission has been asked to make recommendations on these youth rates. We make evidence-based recommendations, and this research will be of great importance to us in our consideration of this important issue and will inform our recommendations.”