Tax changes and energy price drops 'reduce living wage by five cents'

It is the first time the living wage has fallen since the Living Wage Technical Group started calculating it a decade ago. Picture: Patrick Bolger/Bloomberg

Tax changes and a drop in energy prices have pushed the living wage down by five cents per hour, an expert technical group has said.

It added that the minimum wage is still €2.05 below the real living wage of €14.75.

The living wage is the minimum hourly pay needed by a full-time worker, without dependents, to afford the goods and services that people have agreed are essential for enabling a basic, decent, standard of living.

Its calculation by the Living Wage Technical Group (LWTG) is based on budget standards research undertaken by the Vincentian MESL Research Centre at the Society of Saint Vincent de Paul (SVP), and aims to reflect real costs faced by employees in Ireland.

Assistant professor of social policy Dr Micheal Collins said it was the first time the living wage has fallen since the group started calculating it a decade ago.

Over the past year, the technical group said living costs have increased for eight areas of expenditure included in the calculation and decreased for seven.

The largest cost increase in cash terms was rent, which rose by €12.28 a week to €210.60.

The largest cost increases were in education (+6.6%), housing (+6.2%) and car insurance (+4.5%).

Food costs rose by 1.5%, coming off a 21% increase in the previous year. The largest cost increase in cash terms was rent, which rose by €12.28 a week to €210.60.

The biggest decreases were in household energy costs (-16.6%), health costs (-4.8%) and the cost of household services (-4%).

The Living Wage Technical Group said that tax changes in the last budget played "an important role" by increasing the net incomes of lower paid workers, mentioning the rent tax credit of €750 in particular.

"The combined amount of income tax, USC, and PRSI that would be paid by a living wage worker reduced from €71.58 a week to €61.16 a week — a reduction of €10.42 — mostly driven by the rent tax credit," the group said.

Robert Thornton, research manager with the Vincentian MESL Research Centre and a member of the LWTG, said: "The latest calculation of a living wage is nearly identical to last year, despite higher costs in some areas like food and rent, because of a combination of lower energy costs and tax changes made in the last budget.”

• PA