Background information

In July 2022 the Low Pay Commission published its recommendation for an increase in the minimum wage. It took the following issues into account in its deliberations:

• Any changes to the National Minimum Wage (NMW) must take place on an incremental basis to avoid negative impacts on jobs and on Ireland’s competitiveness, particularly given the backdrop of the continuing recovery from the COVID-19 pandemic and the significant challenges of the Northern Ireland Protocol and the fall-out from the Ukrainian crisis.
• Ireland’s current NMW is already amongst the highest in the EU in absolute terms; in nominal terms, Ireland has the second highest hourly minimum wage rate of those EU countries that have statutory minimum wages and in purchasing power terms, Ireland has the sixth highest national minimum wage in the EU.
• Inflation in the year to May 2022 was 7.8%, with inflation for 2023 forecast by ESRI to be 4%9.
• The cost of living has increased significantly
• Sectors where minimum and low wages are more prevalent, such as hospitality, were badly affected by the pandemic, and are continuing their recovery.

Content of measure

The Low Pay Commission recommended that the rate of the National Minimum Wage for an adult worker be increased to €11.30 per hour. The recommendation was supported by seven of the nine members of the Commission. The recommendation was not supported by two of the employee representative members of the Commission.

In September 2022, the Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar announced that the Government had accepted the recommendation of the Low Pay Commission to increase the National Minimum Wage to €11.30 per hour from 1 January 2023.

The Tánaiste 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 hope that this increase, along with the other measures that will be announced as part of Budget 2023, will help to protect the lowest paid workers from the rising cost of living. Our objective is to put more money in people’s pockets and reduce the cost of living.”

Use of measure

According to the Government, an estimated 164,700 workers will benefit from the increase in the Minimum Wage.

Target groups

Workers	Businesses	Citizens
Other groups of workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Social partners jointly Trade unions Employers' organisations Other social actors (e.g. NGOs)	No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Agreed (outcome) incl. social partner initiative	Agreed (outcome) incl. social partner initiative
Form	Consultation through tripartite or bipartite social dialogue bodies	Consultation through tripartite or bipartite social dialogue bodies

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Peak or cross-sectoral level

Involvement

The social partners have representatives on the Low Pay Commission. There are 3 employee representatives and three employer representatives.

Views and reactions

The employer representatives had supported the Low Pay Commission recommendation to increase the minimum wage to €11.30 per hour. Two of the employee representative members of the Commission did not support the recommendation. They submitted a minority report stating that due to the real pay cuts in 2021 and 2022, the LPC recommendation is not enough to protect NMW employee living. They also asserted that the LPC recommendation will make it more difficult to reach the 60 percent target of the median wage by 2026. They had proposed:

• An increase of 75 cents in January 2023 – to €11.25.
• A further increase of 75 cents in July 2023 – to €12.00.
• A temporary increase of 30 cents in the NMW in the last quarter in 2022, bringing the NMW to €10.80.

Following the Government's announcement, the Small Firms Association called for the current wage rate to be maintained and for the Government’s plan to phase in a new living wage to replace the minimum wage to be postponed. Sven Spollen-Behrens, director of the Small Firms Association, said “costs for small business owners are at a never-seen-before high. It is disappointing that government are now adding to these by imposing a further increase in the national minimum wage.”

Sources

• 20 July 2022: Low Pay Commission (www.gov.ie)
• 14 September 2022: Tánaiste announces increase in the National Minimum Wage and sets the 2023 Living Wage (merrionstreet.ie)
• 14 September 2022: Tánaiste Leo Varadkar announces increase in the national minimum wage by 80c, with 164,700 people to benefit (www.independent.ie)