One in five earning less than living wage in Ireland

This year’s living wage of €12.90 an hour (€26,200 a year) is up 4.9% on last year's €12.30 an hour, mainly driven by rent increases. File picture: Leah Farrell / RollingNews.ie

Soaring rents and increasing energy costs have contributed to a rising living wage in Ireland.

It now stands at €12.90, as calculated by the Living Wage Technical Group (LWTG).

The living wage rate is calculated by the LWTG based on research undertaken by the Vincentian Partnership for Social Justice. It establishes the average gross salary which will enable full-time (39 hours a week) employed adults (without dependents) across Ireland to afford a socially acceptable standard of living.

This year’s living wage of €12.90 an hour (€26,200 a year) is up 4.9% on last year's €12.30 an hour.

This increase of 60c is mainly driven by rent increases. Rising rents are responsible for 3.9 percentage points of the 4.9% increase this year.

Someone receiving the 2021/22 living wage rate and living in Dublin will spend an average of 64.7% of their salary, after tax, on housing.

Since the living wage rate was first calculated in 2014, housing costs have increased by 66%. If rents had risen in line with other living costs, today's living wage would only be €10.70.

Even if today’s living wage was not inflated by rental costs, €10.70 is still above the current national minimum wage of €10.20 an hour.

It is estimated that about one in five full-time workers are currently earning less than the living wage in Ireland, suggesting they are forced to do without certain essentials so they can make ends meet.

Excluding rent, the overall cost of the minimum needs for the working-age single adult has increased by 1.3% when compared to 2020.

Soaring cost of energy

The other significant upward pressure on the living wage is the soaring cost of energy for home heating and transport. Decreases in other areas, such as food, clothing, and car insurance, were not enough to counteract an overall increase in the living wage this year.

The other significant upward pressure on the living wage is the soaring cost of energy for home heating and transport.

Robert Thornton, Vincentian Partnership for Social Justice senior research and policy officer and member of the Living Wage Technical Group said: “The living wage rate is based on the rationale that full-time employment will at least provide for a socially acceptable minimum standard of living for a single person without dependents. It represents the minimum required to meet physical, social, and psychological needs, and enable a life with dignity. Having an income below this standard of living means doing without goods and services which are essential for taking part in the norms of everyday life in Ireland.” 

Tánaiste and Employment Minister Leo Varadkar said last week he hoped to introduce the living wage on a phased basis in late 2022 or 2023.

"As we see a return to inflation and a rise in the cost of living, we need to protect people’s standard of living – pay increases, tax reform, worker and pension increases,” he said.