Dr. Paul Redmond:

On potential negative consequences as a result of a minimum wage increase, it is crucial that we continue to monitor this because the issue is not cut and dry. If we are trying to categorise the evidence on minimum wage increases it is safe to say there are many studies that show that moderate or small minimum wage increases are associated with little to no job loss. There are many credible studies that indicate adverse employment effects and we found adverse employment effects in hours reductions.

The evidence is not cut and dry; there are studies that show negative employment effects but importantly, in Ireland we are talking about targeting a living wage as the minimum wage. The reality is that the evidence on minimum wage increases tends to look at relatively small minimum wages and the truth is we just do not know enough about large minimum wage increases to the extent where the minimum wage is going to 60% of median income, for example. We need to continuously monitor this and investigate whether there are negative employment effects. This is important, especially in light of recent evidence on the UK living wage, which is trying to evaluate the consequences of same.

A recent UK study shows that in general and overall there are little to no job loss effects when a living wage is introduced but when they drill down deeper into the data they show that when one looks at women there were some job loss effects. We have to pay attention to potential adverse consequences therefore and this is something the Low Pay Commission referenced. Usually when one is thinking about a living wage, that differs from a minimum wage as the focus is on what rate it should be and other factors such as the state of the economy are considered less and less. The Low Pay Commission has stressed in its report that even while moving towards a living wage it is crucial to pay attention to other factors and to try to quantify what is happening with employment effects. I take the point that in general we tend to see relatively limited job loss or negative employment effects to a living wage being introduced but the truth is that we still need to monitor this.