Increase In The National Minimum Wage

January 02, 2020

In October 2019, the Government accepted a proposal from the Low Pay Commission to increase the minimum wage by 30 cent per hour.  However, a decision was taken then to postpone any increase until there was greater clarity regarding Brexit and the ability of business to absorb an increase.

The Low Pay Commission is an independent body tasked with examining the appropriate rate of the statutory minimum wage. Since its establishment, the Low Pay Commission’s recommendations have included increases of 50 cent in 2016, 10 cent in 2017, 30 cent in 2018 and 25 cent in 2019, which have all been accepted by Government and consequently represented an increase in the National Minimum Wage of 13.2% since 2015. These increases have resulted in Ireland having the third highest hourly National Minimum wage rate in the European Union.

Since then in late December 2019, the Minister for Employment Affairs and Social Protection, Regina Doherty TD, announced that the Government has now decided to increase the National Minimum Wage to €10.10 as and from 1^st February 2020 due to the strong growth in earnings across the economy over the last year and thanks to greater clarity in the UK regarding their plans for Brexit.

Minister Doherty stated:

"I am pleased to announce that the increase in the minimum wage to €10.10 will now come into effect in February. The minimum wage is one of a number of important measures designed to support working families, especially those on lower incomes, and shows the government’s commitment to supporting low paid workers.

"With this most recent increase in the National Minimum Wage, an employee on minimum wage who works a full 39-hour week will now receive an additional €11.70 per week, or an extra €608.40 gross per year. In fact, since 2016, a minimum wage employee working a 39-hour week has received a gross pay increase of €2,331. Since 2015, we have increased the minimum wage by 13.2% - ahead of the rate of inflation – thereby ensuring real increases in the earnings of the lower paid. All types of work should pay well and it is my determination that a job should really lift people out of poverty. The ongoing increases in the minimum wage help to ensure that happens."

In order to ensure that the increase in the minimum wage does not result in employers attracting a higher level of PRSI charge solely due to this increase, the employer PRSI threshold will increase from €386 currently to €395 as and from 1^st February 2020 also.