Varadkar announces living wage plan to bring hourly rates up to €12.17

It is planned that the minimum wage will be abolished in 2026, which the Tánaiste said will require legislation.

Leo Varadkar said the €12.17 rate was arrived at by the Low Pay Commission using 'an objective basis for calculation' which was backed up by research. Picture: PA Wire

The Government has moved to phase in a living wage that will see salary increases for the lowest-paid workers.

From next year, it is proposed that the living wage will be calculated as 60% of median wage in any given year.

This would bring hourly rates up to €12.17 from the current minimum wage of €10.50 per hour. This would increase each year to end up at €13.70 in 2026.

Announcing the plan, Tánaiste Leo Varadkar said: “Better terms and conditions for employees must be one of the legacies of the pandemic. 

"The living wage will build on the programme of improvements we are making, from introducing mandatory sick pay, to auto-enrolment for pensions, to putting in place the laws, regulations and infrastructure to give people more flexibility over how and where they work.” 

The Living Wage for 2021 had been previously set at €12.90 per hour by Social Justice Ireland and other groups.

Asked about this, Mr Varadkar said the €12.17 rate was arrived at by the Low Pay Commission using “an objective basis for calculation” which was backed up by research.

He pointed out that the Commission was made up of employers' representatives, unions and independent experts.

Mr Varadkar said there is need for a “sensible and balanced” pay increase “so that people can help cover the increase in the cost of living, but not to the extent that it ends up forcing employers to close their businesses, cut people's hours or lay them off because that would be counterproductive, of course.” 

Consultations

Mr Varadkar will now consult with various interested parties, including employer and worker representative groups, unions and the public on the draft plan.

It is planned that the minimum wage will be abolished in 2026, which Mr Varadkar said will require legislation.

Depending on prevailing economic circumstances, it is proposed to give the Low Pay Commission discretion to introduce the full living wage faster or slower than the four years proposed.