Written answers
Thursday, 10 April 2025
Department of Enterprise, Trade and Employment
Low Pay Commission
Jen Cummins (Dublin South Central, Social Democrats)
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191. To ask the Minister for Enterprise, Trade and Employment for an update regarding the Low Pay Commission recommendation of the abolition of the sub-minimum rates. [18138/25]
Jen Cummins (Dublin South Central, Social Democrats)
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192. To ask the Minister for Enterprise, Trade and Employment for an update on the economic impact assessment on the issue on the abolition of the sub-minimum rates; and if he will make a statement on the matter. [18139/25]
Peter Burke (Longford-Westmeath, Fine Gael)
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I propose to take Questions Nos. 191 and 192 together.
The National Minimum Wage Acts allow for sub-minimum rates of the minimum wage for those employees aged under 20. Those aged less than 18 years can be paid 70 per cent of the full minimum wage rate, while those aged 18 years and 19 years can be paid 80 and 90 per cent of the full rate, respectively.The Low Pay Commission (LPC) recommended the abolition of these sub-minimum youth rates last year. The LPC also 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, and they highlighted that Government may need to take its own legal advice on the matter.
I agree with the Commission that this is a complex issue, and I am giving their findings and recommendations my full consideration. As the Deputy is aware my Department has commissioned an economic impact assessment of the Commission’s recommendations.
The LPC recommendations were accompanied by a research report by the ESRI. While this study provides valuable information on the incidence and characteristics of sub-minimum employment in Ireland, during 2022, it stops short of modelling the impact of making changes to youth rates.
The economic impact assessment will provide us with more up-to-date data on the use of sub-minimum rates and 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.
The Government is committed to fair and sustainable wages for all workers. The National Minimum Wage increased to €13.50 per hour on 1st January, an increase of over 6% which is ahead of projected wage growth across the economy. This followed other significant increases in the minimum wage and show Government’s continuing commitment to fair wages for the lowest paid workers in our economy. But it is also important to acknowledge the challenges the enterprise sector has faced over the last number of years and to also recognise that the current system of youth rates is based on a percentage of the full minimum wage. This means that when the minimum wage increases, these sub-minimum rates also increase.
We know that the use of sub-minimum youth rates is largely concentrated in the accommodation, food, and retail sectors, and that these are sectors that have reported facing considerable cost pressures.
It is important that we give this issue 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 and any required legal advice is available to us.
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