Minimum wage a ‘blunt tool’ in tackling poverty

Gaps between women and men, and young and older workers on the minimum wage have substantially narrowed, but there are still inexplicably more non-nationals than Irish workers in receipt of the lowest wages, according to the latest research.

The Economic and Social Research Institute study concludes that the minimum wage is a “blunt instrument” if the Government intends to use increases to tackle household poverty. It says there is little evidence to support the view that increases automatically reduce employment by putting jobs under threat.

Research professor Seamus McGuinness said the minimum wage “plays an important role in society” but that other policies may be needed to reduce poverty caused by jobless households.

Before recent increases in the adult minimum pay level to €9.25, women and young workers were more likely to be on the minimum wage because they were involved in low-paid jobs.

After the increases, the gap between female and male minimum wage workers has all but closed, while the continuing gap for young workers can be explained by the types of jobs they take up.

Mr McGuinness said there are still, by a “sizeable” amount, more non-nationals than nationals in receipt of the minimum wage even after allowing for factors such as job types. “There could well be an issue.”

Similar to findings in the UK and Australia, the biggest risk of facing poverty was unemployment in households, he said.

The study says: “Contrary to what might be assumed, economically disadvantaged people make up a minority of the total population of minimum wage employees.”

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