General News / September 14, 2022

Minimum wage set to increase in January

Image: Unsplash
General News / September 14, 2022

Minimum wage set to increase in January

Words: Ellen Kenny

As the Dáil resumes today, Cabinet is set to approve an increase of the minimum wage by 80 cent in 2023.

The Cabinet is due to approve an increase of the minimum wage today. From January, minimum wage will increase by 80 cent from 10.50 euros to 11.30 euros. This new increase will coincide with changes to PRSI and USC.

This increase is one of many recommendations from the the Low Pay Commission, a statutory body made up of workers’ representatives, business representatives and independent experts.

However, the Commission has stressed that the minimum wage alone cannot compensate inflation and the cost of living crisis. It recommends additional measures are taken to support low-paid workers. This includes reevaluating the impact of increasing minimum wage on the social welfare system and adjusting this accordingly.

Tánaiste Leo Varadkar is also set to bring the Commission’s recommendation of implementing the living wage to Government today. Varadkar will recommend that the official living wage is increased from 12.17 euros to 13.10 euros from January 2023.

The current official living wage was decided by the Low Pay Commission report, although other groups such as the Living Wage Foundation put the living wage at 12.90 euros. The Government plans to phase in the living wage between now and 2026, when it will become mandatory.

Cost of living crisis

This announcement comes as the Government prepares a package to accommodate the current cost of living crisis. The annual inflation rate in Ireland remained at 9.1 per cent in July of 2022. This is the highest level of inflation in 38 years.

Many businesses have seen a huge increase in their heating and energy bills. Inchicore-based brewery Rascals Brewery saw a 1000 per cent increase in their gas bills.

Reactions to minimum wage increase

The Irish Congress of Trade Unions (ICTU) described the 80 cent increase as inadequate. They also confirmed that their two representatives on the Commission opposed the recommendation.

“Given the current cost of living crisis and consequent income pressures on workers, ICTU and its affiliate unions have been calling for a very significant rise in the minimum wage,” the ICTU said in a statement.

“The recommended 80 cent increase fails the test of protecting the living standards of those on the lowest wage and fails the test of setting a sustainable foundation for progressing to a living wage.”

CEO of ISME Neil McDonnell also expressed concerns that this increase in minimum wage will harm businesses. Speaking to Newstalk this morning, he said “employers are not going to be able to bridge the gap” between the current minimum wage and the increase. Employees will also likely see reduced working hours.

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