An assessment of the economic impact of abolishing sub-minimum wage rates for teenage workers is to be commissioned by the Government after the Low Pay Commission (LPC) recommended doing away with the reduced rates.
The LPC recommends abolishing the reduced rates at some point after the start of next year but suggests there should be subsequent reviews of the impact after two and four years so as to establish whether there has been an adverse impact, especially in relation to workers under the age of 18.
At present, 19-year-olds must be paid at least 90 per cent of the national minimum wage (NMW) of €12.70, or €11.43 per hour, with 18-year-olds required to be on at least €10.16 and anyone below that age entitled to at least earn €8.89 per hour.
The majority of young workers impacted are in the hospitality and retail sectors, although in a report published on Tuesday the LPC suggests three-quarters are already paid at least the full minimum wage. A total of 15,000 workers, two thirds of them under 18, are actually affected by the sub-minimum rates.
The LPC itself says the issue is “complex” and “will require the full deliberation and consideration of Government, and may require further legal advice and consultation with stakeholders”.
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Reacting to the report, Minister for Enterprise, Trade and Employment Peter Burke said the Government will do all of that before proceeding, and that it will also assess the impact that abolishing the lower rates will have on SMEs before deciding on a course of action.
“This is an important and complex issue that will require detailed examination by Government,” he said. “My department will now commission an economic impact assessment and seek legal advice on the Low Pay Commission’s recommendations,” he added.
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The legal advice will be required to assess a suggestion by the LPC that the reduced rates would effectively be contrary to European law under the terms of the Adequate Minimum Wage Directive due to be transposed into Irish law by November of this year.
Under the terms of the directive, the LPC says, any exception to wider minimum universal wage rates must be justified on the basis of a valid social policy objective. It says its legal advice is that reducing costs for employers would not be regarded as a valid justification.
It suggests there is insufficient evidence that previously stated policy goals of discouraging early school leaving and encouraging employers to provide training to young workers are being achieved through the sub-minimum rates.
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Reacting to the publication of the report and the Minister’s statement, Irish Congress of Trade Unions general secretary Owen Reidy said the Government should act on the report’s recommendations immediately.
“Lower minimum wage rules for young workers are out of line with EU norms and EU law,” he said. “The Low Pay Commission review, and its unanimous recommendation that they are abolished for all workers, vindicates congress’s position. The Government must act without delay.”
