The Government has this week approved plans to introduce a new national 'living wage' which is set to replace the minimum wage in 2026.
The new scheme will be brought in gradually over a four-year period starting next year and will be set at 60 per cent of the hourly median wage. In 2023, it is estimated that 60% of median earnings would equate to approximately €13.10 per hour.
However, before this happens on January 1, 2023 the Government will bring in an 80c increase to the National Minimum Wage to €11.30 per hour. This will be followed by gradual increases to the National Minimum Wage until it reaches 60 per cent of hourly median earnings
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The living wage is described as being the minimum amount people need to live and take part in Irish society. In 2021, there were 164,000 people earning the National Minimum Wage.
When the new living wage comes into effect in 2026, subject to an assessment of the impact of the change, the Low Pay Commission will advise on the practicalities of gradually increasing the targeted threshold rate towards 66 per cent of the hourly median wage.
Tanaiste Leo Varadkar welcomed the announcement that the national living wage will come into effect for 2026. He said: "Improving terms and conditions for workers must be one of the legacies of the pandemic.
"Across the country thousands of minimum wage workers, regardless of what job, sector or location they work in, will benefit from this increase. In addition, many more employees will feel the benefits of knock-on increases resulting from the changes.
"The introduction of a living wage is an important step we are taking towards eradicating low-wage employment for all workers and it will be implemented gradually over a four-year period," he said. Mr Varadkar added that extensive research and consultation took place on the new living wage, which will benefit workers while also being manageable for businesses.
He said: "It’s important to get the balance right."
The introduction of a living wage in Ireland has been informed by the Low Pay Commission’s report and recommendations on the Living Wage and background research completed by Maynooth University as well as the results of a public consultation held over the summer.
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