Written answers

Thursday, 24 October 2024

Department of Enterprise, Trade and Employment

Wage-setting Mechanisms

Photo of Paul MurphyPaul Murphy (Dublin South West, RISE)
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60. To ask the Minister for Enterprise, Trade and Employment if he is planning to abolish sub-minimum wages, as recommended by the Low Pay Commission and the ESRI; and if he will make a statement on the matter. [43534/24]

Photo of Emer HigginsEmer Higgins (Dublin Mid West, Fine Gael)
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The National Minimum Wage Acts allow for lower, or sub-minimum rates of the minimum wage for those employees aged under 20. The rates that can apply are as follows: for those aged 19, 90% of the prevailing rate, for those aged 18 it is 80% and for those aged 17 and under it is 70%.

As the Deputy is aware, in 2022, the then Tánaiste and Minister for Enterprise, Trade and Employment asked the Low Pay Commission to examine these sub-minimum youth rates and to make recommendations on whether the rates should be retained, abolished or amended.

In March 2024 the Low Pay Commission recommended the abolition of sub-minimum rates.

These recommendations were accompanied by a background research report by the ESRI. The ESRI report is a technical one, and the ESRI did not make any recommendations on the abolition of these rates.

The Low Pay Commission highlighted in its report that this is a complex issue. They have said Government will need to give their findings and recommendations detailed consideration and deliberation.

I am doing just that, and I am giving the Commission’s findings full consideration. My Department has commissioned an economic impact assessment of the Low Pay Commission’s recommendations.

While the ESRI study provides valuable information on the incidence and characteristics of sub-minimum employment in Ireland, it stops short of modelling the impact of making changes to youth rates.

The economic impact assessment will independently evaluate the economic impact of possible changes to the sub-minimum wage regime in Ireland by:

  • Modelling the impact of making changes to youth rates on firms of different size and in different sectors and regions, and
  • Examining any potential unintended impacts of making changes to youth rates, such as increased unemployment of younger workers and the possibility of young people exiting formal education in favour of entering the workforce.
This is a complicated and nuanced issue. It is important that we give it the full care and deliberation it requires, and to not rush into a decision that could have unintended consequences, for young people and for employers. Government will make a decision on these rates after the economic impact assessment is completed.

In the meantime, it is important to remember that the National Minimum Wage will increase by 80 cent to €13.50 on 1st January 2025. This is an increase of 6.3%, ahead of wage growth and inflation forecasts. Workers on sub-minimum rates of the National Minimum Wage will also see their wages increase on the 1st January; as the current system of youth rates is based on a percentage of the full minimum wage.

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