Report vindicates decision to hike Minimum Wage

07 March 2019

2016 minimum wage increase narrows wage gap between top 10% and bottom 10% of earners by 8%

Welcoming the finding in today’s report from the ESRI that found that the 2016 national minimum wage increase delivered by the Labour Party significantly narrowed the hourly wage inequality gap between high and low earners, Senator Ged Nash said:

“This report vindicates our decision to establish the Low Pay Commission (LPC) as a means to ensure that work pays.

“This report, commissioned by the LPC has found that the 50 cent per hour increase to the minimum wage that I introduced on January 1st 2016 has enabled the gap in hourly earnings between the top 10% and bottom 10% of earners to narrow by up to 8%.

“The rise we introduced arising from the Commission’s very first recommendation saw full-time workers on the national minimum wage gain just over €1,000 in a year.

“As I clearly explained when the Low Pay Commission was established in 2015, an increase to the hourly rate of the national minimum wage would result in an upward effect on the wages of higher paid workers.

“This report confirms that this was the case, with a boost to wages experienced by around 25% of all workers as a consequence of the 2016 minimum wage increase with younger workers having benefitted the most from the measure.”

Labour’s Employment spokesperson continued;

“The creation of the Low Pay Commission by Labour represented one of the most important institutional reforms in the fight to tackle the scourge of low pay. As a result, we have had four successive increases to the national minimum wage.

“However, 22.5% of workers in Ireland are in low paid employment with Eurostat defining ‘low pay’ as pay below two-thirds of median earnings.

“When Mary Harney introduced the statutory minimum wage, she set the rate at two-thirds of the median.

“However, following on from this initial rate, the NMW (currently €9.80/hour) has failed to keep up with rises in median average rates.

“To provide dignity for working people Labour has advised the Low Pay Commission to gradually restore the link to median earnings over the next four years.

“This proposal would see the minimum wage hourly rate reach two-thirds of the median by 2023.

“Based on 2014 data (the year for which data is most recently available) the hourly rate of the NMW should reach and be maintained at 66% of median hourly income in four years’ time. To this end, our analysis proposes that the 2020 rate should be set at €11.25.

“Small businesses that cannot afford to pay the rate have it open to them to use the ‘inability to pay clause’ which exists in the minimum wage law and all of the evidence from the Commission and internationally confirms that incremental and predictable increases to statutory minimum hourly rates of pay do not come at a cost to jobs and employment rates.”

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