ESRI: No negative effects from minimum wage rise

By Pádraig Hoare

The hike in the national minimum wage has led to less hours worked by employees on the rate but has encouraged more people to find a job, according to the Economic and Social Research Institute.

A report from the economic think-tank shows that although the increase from €8.65 to €9.15 per hour in January 2016 led to a reduction in the average number of hours worked by minimum-wage employees, that reduction was driven by more part-time workers motivated to find a job following the wage increase.

The report, co-authored by the ESRI’s Seamus McGuinness and Paul Redmond, says the increase in the minimum wage “had a negative and statistically significant effect on the hours worked of minimum-wage workers”, mostly driven by temporary-contract workers who saw a weekly reduction of around three-and-a-half hours.

Part-time employment increased by around 3%, the report found.

Mr McGuinness said: “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.

“Our analysis revealed no negative employment effects because of the 2016 increase. There is little evidence that the 2016 increase in the national minimum wage rate had any immediate adverse impacts on low-paid Irish workers.”

Business groups such as Ibec have criticised the increase in the national minimum wage, saying the Low Pay Commission’s recommendation to increase it by 30c this year had “no economic basis” and that such a hike would “jeopardise thousands of jobs” in retail.

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