Editor’s Note
It should be a basic tenet of private enterprise that employers are entitled to offer employment at whatever pay terms they see fit. After all, there is no compulsion on an individual to take up that employment — in Ireland, if you choose not to work the state will look after you. When the employment commences, there is an extensive panoply of legal rights that the employer cannot contract out of. Those rights are being added to all the time, including a new right to sick pay paid for by the employer.
Since the introduction of the national minimum wage in 2000, wage-setting is no longer at the discretion of the employer. The minimum wage is currently €10.50 an hour, and now it is set for sharp escalation by being rebranded as a living wage, starting in 2023. The living wage was a promise in the Programme for Government and employment minister and Fine Gael leader Leo Varadkar is of the view that better terms and conditions for employees must be one of the legacies of the pandemic. Varadkar is proposing to adopt the recommendation from the Low Pay Commission that the new living wage should be set at 60% of the median wage across the economy. On current imperfect LPC calculations, this would mean a 16% increase in the hourly minimum wage to €12.17 an hour from January 2023.
Business owners in the food services and accommodation sector must be agog that at a time when they are being crushed by soaring energy costs, and still reeling from two years of Covid restrictions, the Tánaiste wants to hammer them with mandatory pay increases for their staff. Two-thirds of employment in this sector was directly supported by the EWSS wage subsidies in Q1 2022, and now of course the EWSS has been closed down. The rationale for replacing the minimum wage with a living wage is woolly at best.
In the LPC’s view, the living wage is an income floor that enables employees to afford the essentials of life, and is “set at a level that allows a worker to attain a socially acceptable living standard”. The Low Pay Commission decided that this level should be 60% of the median wage. The number appears to have been plucked from the air, albeit buttressed by research that claims this statutory wage floor won’t have substantial effects on employment.
LPC research shows that 40% of workers in the food and accommodation sector earn less than 60% of the median wage. “This suggests that the introduction of a living wage at this rate could have a significant effect on this sector,” the commission blithely remarks.