The delay in replacing the national minimum wage with a living wage will cost the country’s lowest paid workers €600 each next year, the Irish Congress of Trade Unions (Ictu) has said.
The union said an increase to the minimum wage announced in the budget was 30 cent lower than it would have been had the transition not been deferred by the Government from 2026 to 2029 earlier this year.
The living wage is defined as the wage needed to make a decent standard of living affordable and is set at 60 per cent of the median hourly wage.
In the budget, Minister for Finance Paschal Donohoe confirmed the minimum wage would increase by 65 cent on January 1st, a rise of just under 5 per cent, taking it from €13.50 to €14.65.
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The new rate will mean an increase of about €25 per week for workers on the minimum wage on a 39-hour week. It will bring weekly pay from €526 to €551.85, an annual salary of €28,696.
Up to 200,000 people earn the minimum wage in Ireland, a group disproportionately made up of women, younger workers and people with disabilities, many of whom work in the retail, hospitality and service sectors.
The increases are based on recommendations from the Low Pay Commission (LPC) whose membership includes representatives of employers and trade unions.
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Had the target date for the introduction of a living wage not been delayed by three years, then a 95 cent increase would have been required next year to take the minimum wage to the required level, the commission calculated.
“It beggars belief that minimum wage workers are being short-changed by up to €600 by Government at a time when the labour market and general economic environment have never been stronger,” said Ictu general secretary Owen Reidy.
The Restaurants Association of Ireland, while welcoming the restoration of the 9 per cent VAT rate for the hospitality sector, said many businesses would struggle getting to July, when it is implemented, because of the increase in the minimum wage and the start of auto-enrolment, the new pensions savings scheme for certain employees who are not paying into a pension.
“July 2026 is too far away for many businesses already on the brink,” said Adrian Cummins, chief executive of the association.
“The combined impact of a significant minimum wage increase and the roll-out of pension auto-enrolment in January will place unbearable strain on food-led hospitality businesses, many of which are small, family-run enterprises operating on razor-thin margins.”
The chief executive of one of the country’s largest providers of services to businesses, Bidvest Noonan, which employs 10,000 people providing cleaning, security and other services, said he believed the increase in the minimum wage was fair.
“It’s an important measure that supports fair pay and acknowledges the contribution of people working in essential roles across our economy,” said Declan Doyle.
The National Youth Council of Ireland criticised the lack of movement on the sub-minimum rates paid to young workers. Last year the LPC recommended that those rates be abolished.
Instead, the rates, which are based on proportions of the full rate, will increase in line with it at the start of the new year.
