Minimum Wage Ireland – 3.2% increase expected for January 2018

    The minimum wage in Ireland is expected to increase by 30c to €9.55 per hour on January 1st, 2018. An Taoiseach Leo Varadkar, Tánaiste Frances Fitzgerald and Minister of State for Disability Issues Finian McGrath made the announcement of the 3.2% increase recently, which is based on the recommendations of the LPC (Low Pay Commission). The LPC’s recommendation only specifies an increase for “an experienced adult worker”. Continue reading for details on the variations of the current national minimum wage, the LPC’s specific recommendations and an overview of the factors that they considered when making their recommendations.

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    Minimum Wage Ireland – Current Rates

    The current minimum wage in Ireland is a maximum €9.25 per hour for an experienced adult worker. An experienced adult worker is someone who is over 18 years and not in their first 2 years of employment. This national minimum wage came into effect January 1st 2017. The below table outlines the variations in the Irish minimum wage:

      Minimum Wage Ireland (hourly rate) % of minimum wage
    Experienced adult worker €9.25 100%
    Aged under 18 €6.48 70%
    First year from date of first employment aged over 18 €7.40 80%
    Second year from date of first employment aged over 18 €8.33 90%
    Employee aged over 18, in structured training during working hours:
    1st one third period €6.94 75%
    2nd one third period €7.40 80%
    3rd one third period €8.33 90%

    To see how EU member states minimum wage rates compare, click here.

    Minimum wage increase considerations

    When making their recommendation for the minimum wage increase, the Low Pay Commission had regard to “the matters which the Minimum Wage (Low Pay Commission) Act 2015 sets down for consideration” and they also specifically noted that they took into account the following:

    • The Irish economy is growing strongly, and the recovery has begun to reach all regions.
    • The initial post-2012 recovery was export-driven, whereas domestic consumption and investment are continuing to make a much stronger contribution towards growth.
    • There are significant risks to Irish economic performance in the international economic environment. In particular the decision by the United Kingdom to exit from the European Union will have a significant, unquantifiable, impact over the coming months and years. Some regions and sectors are particularly exposed to the volatility of sterling and will be affected disproportionately.
    • The reforms of the United States taxation system proposed by President Trump have the potential to impact negatively on the Irish economy.
    • Continued growth in employment, favouring full-time over part-time employment, and unemployment is at 6.3% (June 2017), close to what is generally regarded as ‘full employment’.
    • Prices are stable or marginally lower over the last 12 months and inflation is projected to rise but remain low.
    • The Department of the Taoiseach’s National Risk Assessment (NRA) 2016 conclusion that “Despite the recent strong performance of the Irish economy, the balance of risk to the baseline remains tilted to the downside”, and the ongoing macro-economic and fiscal risks highlighted in the April 2017 Department of Finance Stability Programme Update (SPU)
    • The increasing costs associated with the housing market, in particular private rental costs in Dublin.

    (Source: lowpaycommission.ie)

    Recommendations of the LPC

    In light of the above, the LPC made the following recommendations for the national minimum wage:

    1. That the rate of the National Minimum Wage for an experienced adult worker be fixed at a rate of €9.55 per hour. This corresponds to an increase of 3.2 percent in the national minimum wage for an experienced adult worker.

    2. As previously recommended remove the anomaly created by the sudden increase in the rate of employers’ PRSI from 8.5% to 10.75% on weekly earnings of €376...

    3. Provision should be made for the display of basic entitlements in all places of employment where the minimum wage is in operation… This will create and foster a culture of compliance with regard to the NMW, and improve awareness of minimum wage, and employment rights entitlements more generally.

    Recommendation 1 is supported by six of the nine Commission members.

    Recommendations 2 and 3 are supported by nine members of the Commission, although there is not a consensus regarding the extent of the entitlements to be displayed, with some members favouring a ‘single sheet poster’ approach.

    (Source: lowpaycommission.ie)

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