Despite business complaints, a minimum wage increase two years ago didn't lead to job losses
That’s according to a new study by the ESRI and Low Pay Commission.
THE INCREASE IN the national minimum wage rate did not lead to greater unemployment among minimum wage workers, according to a new study by the ESRI and the Low Pay Commission.
On 1 January 2016, the minimum wage increased from €8.65 to €9.15 per hour. The minimum wage has since increased to €9.55 per hour.
The study published today examined whether the 2016 increase led employers to reduce their workforce or the number of hours employees worked.
Before the 2016 minimum wage increase, several business groups warned that such a hike would lead to job losses.
While the research did find that there was a reduction in the average number of hours worked by minimum wage employees, the evidence suggests this was driven by an increase in part-time workers joining the labour market following the wage increase.
The research found that the average number of hours fell by 0.7 hours per week. Among minimum wage workers on temporary contracts, there was a more pronounced reduction of 3.3 hours per week.
Such falls are generally attributed to employers reducing the hours of existing employees because of higher labour costs.
However, further analysis revealed a rise in part-time minimum wage employment, including a rise in the incidence of voluntary part-time work.
Seamus McGuinness, research professor at the ESRI, said that there were “no negative employment effects” because of the 2016 increase.
“The results indicate that at least some of the reduction in the average hours of minimum wage workers may be due to more part-time workers being drawn into the labour market by the higher minimum wage,” he said.
“There is little evidence that the 2016 increase in the national minimum wage rate had any immediate adverse impacts on low-paid Irish workers.”
Dr Donal de Buitléir, chairman of the Low Pay Commission, said the new report provided ”much-needed evidence of the impact of the 2016 increase in the national minimum wage on both hours worked and overall employment trends of minimum wage workers”.
Written by Gráinne Ní Aodha and posted on TheJournal.ie
