Those on minimum wage hit hard with pandemic job losses
Minimum wage employees in Ireland are likely to be suffering disproportionately from job losses as almost half work in sectors worst hit by the Covid-19 pandemic, according to new research by the Economic and Social Research Institute.
The study, entitled ‘A comparative assessment of minimum wage employment in Europe’, also found that being younger, having low levels of education and not being a citizen were key factors driving a higher likelihood of minimum wage employment across Europe.
Overall 9.6% of workers in Ireland are on the minimum wage of €10.20 per hour, but 43% are employed in accommodation, food, wholesale or retail sectors – a higher share than in any country examined in the study.
“Public health measures across Europe, and the world, have led to business closures, with accommodation, food and retail being hit particularly hard. Therefore minimum wage employees are likely to suffer disproportionately from job losses arising from the pandemic,” the research concluded.
The ESRI examined data from 2017/2018 to assess how Ireland rates regarding the incidence, profile and job satisfaction of minimum wage workers, along with the relative size of the minimum wage rate, and the risk of poverty.
The study noted that out of 27 EU member states, 21 – along with the United Kingdom – had a statutory minimum wage, with Ireland rating second highest behind Luxembourg in nominal terms.
However, when cost-of-living differences are factored in, Ireland’s minimum wage dropped to seventh place behind Luxembourg, Germany, the Netherlands, Belgium, the UK and France.
The ESRI estimated that in 2017 and 2018, Ireland’s 9.6% minimum wage incidence was slightly below the 10.5% average across the 14 countries studied, which ranged from a high of 15.6% in Portugal to a low of 1.7% in Belgium.
Age emerged as a significant factor, with employees aged under 29 between five and eight percentage points more likely to be on the minimum wage than those aged over 29.
People who are not citizens are also more likely to earn the minimum wage, as are people with lower educational levels.
In Ireland, people with lower secondary (or less) education were eight percentage points more likely to be on the minimum wage than those with third level education.
The ESRI also noted that in some countries women were “heavily over-represented” among minimum wage workers – though in Ireland, the gender composition was roughly equal.
Being on a permanent contract was also associated with a lower probability of minimum wage employment in all countries except Ireland.
11.4% of minimum wage workers in Ireland were at risk of poverty – the lowest rate in all countries studied, with far higher figures in the Netherlands (46%), Luxembourg (41%) and Spain (35%).
“This is consistent with previous work that shows many minimum wage employees are located in high-income households,” the study states.
Author and ESRI Research Officer Paul Redmond attributed this in some cases to students from high income families doing part-time jobs, or people working part-time to accommodate caring responsibilities.
He stressed the minimum wage was just one policy lever to address poverty, but the priority should be to target jobless and low-income households more intensively.
He summarised the ESRI findings, saying: “Our research shows that minimum wage workers in Ireland may be particularly exposed to the impacts of the Covid-19 pandemic, as they are more likely to work in sectors such as accommodation, food, wholesale and retail. However, minimum wage employees in Ireland are less likely to be at risk of poverty compared to their European counterparts, as they are often located in high-income households.”
The Low Pay Commission, which funded the research, said the report would increase the understanding of the serious impact of the pandemic on minimum wage workers in Ireland.
“It shows that of the countries studied, we have the lowest percentage of minimum wage workers that are at risk of poverty and that, unlike other member states where women are heavily over-represented among minimum wage workers, in Ireland the gender composition was roughly 50/50,” said the Commission’s Chair Dr Donal de Buitleir.