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Wage-setting Mechanisms

Dáil Éireann Debate, Thursday - 7 April 2022

Thursday, 7 April 2022

Questions (76)

Thomas Gould

Question:

76. Deputy Thomas Gould asked the Tánaiste and Minister for Enterprise, Trade and Employment if consideration has been given to increasing the minimum wage given the rising cost of living. [18772/22]

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Written answers

I have acknowledged the pressures people are feeling as the cost of living increases. I know these costs are increasing rapidly and that those on lower incomes are being disproportionately affected.

In relation to the minimum wage, since its establishment in 2015, the Low Pay Commission has been responsible for making annual recommendations to Government on the appropriate rate of the National Minimum Wage.

Since the establishment of the Low Pay Commission, the national minimum wage has increased from €8.65 per hour to €10.50 per hour between 2016 and 2022, a 21.4% increase. This compares with an increase in consumer prices of 7% in the 6 years to December 2021. The Minimum Wage has increased substantially in real terms over recent years.

The share of workers on the minimum wage in Ireland has also fallen consistently since the establishment of the Low Pay Commission. The share of workers on the minimum wage or less as a percentage of the total labour force has reduced from 9.3% in Q4, 2016 to 6.8% in Q4, 2020.

The Low Pay Commission is made up of an equal number of employer representatives, employee representatives, and independent members which helps to provide a balanced view when determining an appropriate rate for the National Minimum Wage. In addition, the establishing legislation requires the Low Pay Commission to give consideration to a range of issues when arriving at a recommendation for the appropriate National Minimum Wage rate. These issues include the cost of living, competitiveness and the likely effect that any proposed recommendation will have on future levels of employment.

When considering increases in the National Minimum Wage during a period of inflation Government must be is conscious of the need to avoid second round effects. Pumping more money into the economy could lead to further inflation.

That being said, I have been clear in my commitment to improving pay and terms and conditions for everyone, but particularly for those on low pay.

I am committed to progressing to a living wage over the lifetime of this Government. In doing so, we need to recognise that many businesses have been badly affected by the pandemic and are also facing rising costs. We need to make sure that we proceed in a way that does not adversely affect inflation or cause jobs to be lost, either in terms of the numbers of people employed, or the numbers of hours worked. To do so would be counterproductive.

While the living wage initiative is being considered, the Government will continue to be guided by the recommendations of the Low Pay Commission with regard to any future changes in the minimum wage. The Low Pay Commission is required to submit its annual recommendation on the National Minimum Wage to me on or before the third Tuesday in July.

Question No. 77 answered with Question No. 68.
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