Minimum wage workers more likely to progress to higher pay, ESRI finds
Minimum wage workers are more likely to transition to higher pay than remain on the minimum wage, according to a new study.
However, non-Irish nationals and people with low levels of education are more likely to remain on the minimum wage compared with other groups in society.
Part-time employees and those on temporary contracts were also found to have a higher likelihood of remaining on the minimum wage, according to findings from a new ESRI/Low Pay Commission report on changes in the wage structure of minimum wage workers.
Over a nine-month period, the majority (30%) were found to be more likely to progress to higher pay, while 18% stayed on minimum wage.
The remaining 52% experienced another type of labour market transition either from or to higher pay, unemployment or inactivity.
The study found that minimum wage employees are found to be up to four percentage points more likely to transition to unemployment or inactivity compared to high paid workers.
However, many non-nationals, young people and those with lower education levels were excluded from the wage growth.
“While minimum wage employment acts as a stepping stone to higher pay for many employees, it is important to note that it can also represent a low wage trap for certain types of workers and is also associated with a greater likelihood of becoming unemployed”, said Dr Paul Redmond, an author of the report.
Dr Donal De Buitléir, Chairman of the Low Pay Commission, said his organisation is responsible in legislation to ensure that any recommendations it makes do not have a significant adverse impact on employment and the low paid.
"This report provides much-needed data regarding the factors which influence the ability of minimum wage workers to transition to higher paid employment and is a valuable source of information for the Commission to consider when making future recommendations,” he said.
