Minimum wage increase did not lead to more unemployment, study finds

The increase in the national minimum wage did not lead to more unemployment among low paid workers, a new study has found.

According to the latest research by the ESRI and the Low Pay Commission, a reduction in hours worked by minimum wage employees was driven by an increase in part-time workers joining the labour market following the wage increase.

The minimum wage increased from €8.65 to €9.15 per hour on January 1st, 2016.

The research also shows that the number of hours worked by minimum wage workers 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 decreases can generally be attributed to employers reducing the hours of existing employees because of higher labour costs.

However, the 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, “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.”

- Digital Desk


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