New research asks which workers are paid minimum wage in Ireland

November 01, 2017

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Labour Markets and Skills
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Today (1 November) the ESRI published a study, which was funded by the Low Pay Commission, to examine the characteristics of workers earning the National Minimum Wage (NMW) in Ireland.

Who is most likely to earn the National Minimum Wage?

The research finds that 4.9 per cent of employees were in receipt of the minimum wage in 2014. However, the percentage was substantially higher among particular sub-groups of workers. Specifically:

  • 9 per cent of female employees were in receipt of the NMW, compared to 2.7 per cent of male employees.
  • At 9 per cent, the incidence of minimum wage pay among non-Irish nationals was over twice that of Irish employees (4.2 per cent).
  • Young people aged 18–29 are more likely than people in other age groups to be on the minimum wage (13.9 per cent).

Job characteristics

Further analysis revealed that most of the higher exposure to NMW employment among females and young people was driven by characteristics of the jobs which they are more likely to hold. Females on the NMW were more likely to work in part-time jobs, in smaller firms or in sectors such as accommodation and food. Jobs with these characteristics raise the likelihood of minimum wage employment. The greater likelihood of being on the NMW among young workers disappeared when we take account of tenure, job type, occupation and sector. This suggests that the higher NMW incidence among young people is explained entirely by factors such as lower levels of experience and the type of employment undertaken. However, non-nationals were found to experience a higher incidence of up to 3 percentage points relative to Irish employees even after job characteristics were controlled for.

Household characteristics

Contrary to what might be assumed, economically disadvantaged people make up a minority of the total population of minimum wage employees. For example, 28 per cent of employees on the minimum wage in 2014 were from deprived households, with the remaining 72 per cent coming from households that were not classified as being deprived. In comparison, 19.5 per cent of workers earning above the minimum wage were from deprived households. Therefore, minimum wage increases will also benefit a large number of individuals who are not from economically disadvantaged or deprived households.

Commenting on the report, Seamus McGuinness, Research Professor at the ESRI, stated, “This study provides valuable information about factors that increase the probability of earning minimum wage in Ireland. It also identifies who would be affected by changes to minimum wage rates and if such changes would be an efficient way to combat poverty. However, our analysis confirms previous assessments by both the Irish Low Pay Commission and our ESRI colleagues Logue and Callan - as a policy tool, the NMW will have only a limited effect on reducing poverty.”

Chair of the Low Pay Commission, Dr Donal de Buitléir, said, “I welcome this study which adds to our knowledge in relation to those earning the NMW in Ireland and increases our ability to make evidence-based recommendations on the NMW.”