A new national living wage has been agreed and is set to replace the minimum wage by 2026.
The new living wage will be phased in over a four-year period starting next year and will be set at 60% of the hourly median wage.
The national minimum wage currently stands at €10.50 and is set to increase by 80c to €11.30 per hour from 1st January 2023. This will be followed by gradual increases until the minimum wage reaches 60% of hourly median earnings, which is estimated to equate to approximately €13.10 per hour by 2023.
The 2022/2023 living wage, a wage which makes possible a minimum acceptable standard of living, is currently €13.85 per hour.
Under the new agreement the Low Pay Commission will have discretion to use adjustment mechanisms to speed up or slow down progress towards 60% of the hourly median wage in response to any specific circumstances that have had a significant impact on economic conditions.
Once the living wage has come into effect in 2026, subject to an assessment of the impact of the change, the Low Pay Commission will advise on the practicalities of gradually increasing the targeted threshold rate towards 66% of the hourly median wage.
While the new living wage scheme has been broadly welcomed, workers under the age of 18 are still only guaranteed up to 70% of the national minimum wage. Laura Bambrick, social policy officer with the Irish Congress of Trade Unions (ICTU) said it was disappointing that young people will continue to get sub-minimum wage rates and called on the living wage to be fast tracked.
“Last month Germany introduced a living wage, increasing a minimum wage of €9.60 in January to a €12 an hour living wage from October 1. That’s the level of ambition we need for our lowest paid workers who were most impacted by the pandemic and inflation,” she said.
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