Dr. Dora Tuda:

Our colleagues from the ESRI, Paul Redmond and Séamus McGuinness, did a lot of work on the minimum wage in Ireland. Obviously, we do not know what will happen next year once this increase comes in. However, what we do know relates to the big increase that was brought in in 2016. Essentially, they found almost no effects on employment. They have a recent paper where they looked at the minimum wage increases from 2016 to 2018 cumulatively. Basically, they found that a little bit of reduction in hours worked. This was maybe two hours per week on average. However, the participation did not. That can come from two sides. Either, as the Senator mentioned, some businesses might fire their employees because the cost of labour might be too high or, on the other hand, employees had met their financial needs so they could work two hours fewer per week. Our colleagues did a follow-up study on that and they found that from the 2016 increase in the minimum wage, there was a 5% increase in the labour cost. However, this was only for firms that had 100% of their employees working in those companies. In their sample, only 3% of those firms were fully made up of minimum-wage employees. That adjustment in hours worked or employment essentially happened mostly through overtime hours and not really through lay-offs. We are therefore hoping that will be the case next year as well.