Jun 2022
17
Living wage to replace minimum wage in Ireland by 2026
It was announced this week that a new living wage, to replace the current minimum wage, is to be phased in for Irish workers, starting in 2023. A living wage is an hourly rate of pay calculated to be the minimum amount that a worker needs to earn to cover the basic cost of living.
The memo which Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar has brought to Cabinet proposes that the living wage is to be set at 60% of the median wage in a given year. Based on this percentage, if the living wage rate were introduced today, it would be set at €12.17 per hour.
Minimum wage in Ireland
The National Minimum Wage was first introduced in Ireland in April 2000 and was also roughly 60% of the median wage at the time. The minimum wage has increased by around 47% since it was first introduced, but it has not kept up with the average earnings or the cost of living.
Since 1st January 2022, the National Minimum Wage is €10.50 per hour for those aged 20 and over.
Rates for other workers are as follows:
| Age group | Minimum hourly rate of pay | % of minimum wage |
| Aged 19 | €9.45 | 90% |
| Aged 18 | €8.40 | 80% |
| Aged under 18 | €7.35 | 70% |
What does the living wage mean for employers?
The national minimum wage will remain in place until the living wage rate is fully phased in, in 2026. The minimum wage rate will increase between now and 2026, closing the gap between the minimum and the living wage. However, the full living wage may be introduced faster or slower than the proposed time frame, depending on prevailing economic circumstances. The Tánaiste has said that the reason the living wage is being introduced gradually is because if it is brought in too quickly businesses could close, or employees could see their hours cut. Leo Varadkar will consult with various interested parties, including employer and worker representative groups, unions and the public on the draft plan.
The living wage is just one of the improvements to workers' rights to be introduced over the coming years. Other changes we are set to see for employees is the introduction of statutory sick pay and automatic enrolment onto pension schemes.
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