The recent increase in the minimum wage has caused some employees to experience a reduction in the number of hours they work – while others have seen the average home-earned wage rise.
Based on the recommendations of the Low Wage Commission, the Irish minimum wage has been increased on an annual basis from 2016 onwards.
The ESRI study, funded by the Low Wage Commission, examined the cumulative effect of three recent minimum wage increases on minimum wage employees’ hours.
From 2016 to 2018, the minimum wage rose on three occasions, rising from 8.65 euros to 9.55 euros an hour.
The results of the study show that during the same period, employees worked hours from minimum wage by about one hour per week.
However, increases in minimum wages were large enough to offset any loss of income due to reduced working hours, leaving the average minimum wage worker in a better financial position.
The impact on working hours was greater for employees in certain sectors.
The minimum wage for employees in the « industry » sector, which is primarily made up of manufacturing workers, saw a decrease of three hours per week from 2016 to 2018.
Likewise, those who work on housing and food saw a 2.5-hour week decrease.
Again, for the average minimum wage of workers in these sectors, wage increases were large enough to offset any loss of income due to working fewer hours.
For many minimum wage employees, such as young part-time workers, the minimum wage is a temporary stepping stone to higher salaries.
However, for some employees, working at minimum wage may represent a long-term arrangement.
Minimum wage workers in manufacturing are older and more likely to work full time compared to other minimum wage workers.
Therefore, decrease in working hours among this group may be of concern as they may be more dependent on minimum wage labor to meet financial obligations.
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‘Average minimum wage worker is better off’
Dr Paul Redmond, author of the report, said: “As the minimum wage increases, it is important that we monitor the effects on employment.
“Our research found a slight decrease in hours worked among all employees from minimum wage after three recent minimum wage increases.
However, those working in manufacturing and in accommodation and food saw an even greater reduction in working hours.
« Nevertheless, it appears that the increases in the minimum wage are large enough to offset any reduction in earnings due to working fewer hours. »
Ultan Courtney, Chair of the Low Pay Committee, said: “The Low Pay Committee has an evidence-based approach to making its recommendations.
The report published today increases our knowledge and understanding of the impact and impact of increases in the national minimum wage.
“I am pleased to note that the report found that the average minimum wage for a worker has been better off financially as a result of increases in the national minimum wage, with the increases recommended by the Low Wage Commission large enough to offset any effects of reduced working hours.”