AN EXAMINATION OF THE LABOUR MARKET TRANSITIONS OF MINIMUM WAGE WORKERS IN IRELAND. ESRI RESEARCH SERIES NUMBER 75 October 2018

Redmond, Paul and McGuinness, Seamus and Maitre, Bertrand (2018) AN EXAMINATION OF THE LABOUR MARKET TRANSITIONS OF MINIMUM WAGE WORKERS IN IRELAND. ESRI RESEARCH SERIES NUMBER 75 October 2018. UNSPECIFIED.

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Abstract

A national minimum wage (NMW) was first introduced in Ireland in 2000, with an initial rate of €5.58 per hour.1 The rate was increased in subsequent years, so that by July 2007 the minimum wage stood at €8.65 per hour. However, from 2007 to 2015 there were no further increases in the NMW. Following recommendations from the Irish Low Pay Commission, which was established in 2015, the NMW was increased in January 2016 from €8.65 to €9.15 per hour, the first increase in nine years. It was further increased to €9.25 per hour in January 2017 and to €9.55 per hour in January 2018, the figure at which it currently stands. In 2016 a question was added to the Quarterly National Household Survey (QNHS) which directly asks employees whether their hourly wage is equal to, above or below the NMW. According to this new measure, the incidence of minimum wage employment was 10.1 per cent in 2016 and 8.2 per cent in 2017.2 Previous work by Maître et al. (2017), investigating the characteristics of minimum wage workers in Ireland, found that women, non-Irish nationals, younger persons, people with lower levels of education and part-time workers were more likely to be on the minimum wage. In this study, we use this new measure of minimum wage employment in Ireland to assess the degree to which individuals in receipt of the NMW transition in and out of NMW employment over a period of three quarters in 2016 and 2017. The objective of the analysis is as follows: (a) to identify the labour market status and key characteristics of individuals moving out of NMW employment to higher pay; (b) to assess the extent to which NMW status is transitory and to identify the rate at which NMW employees transition to higher paid jobs; (c) to examine whether minimum wage employees are more likely to transition to unemployment or inactivity relative to higher paid workers.

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