Drop in workers on minimum wage

The percentage of workers earning €5.72 per hour or less has dropped considerably since the introduction of the national minimum wage, but women and younger workers are still more likely to be paid less, according to a recent study, which was carried out by the Economic and Social Research Institute (ESRI).

The study examined the impact of the minimum wage on Irish business. It found that the number of people earning less than €5.72 per hour fell from 21 per cent before its introduction to just over 4 per cent. However, this varies depending on the sector, with textiles and clothing manufacturing, retailing and the catering industries employing more people at or below this level.

The introduction of the minimum wage has had little direct impact on wage levels. Some firms said they had to increase wages for employees above the minimum wage to maintain pay-level gaps. But the majority of these firms believed wages would have increased anyway as a result of the recent economic climate.

Overall, only 16 per cent of firms believed the minimum wage directly increased their labour costs and, for half of these, the increase was less than 5 per cent.

The study shows that women are almost three times more likely than men to be working in the minimum-wage category.

For men, there is a 2.7 per cent risk of being in this category, compared with a 7.3 per cent risk for women.

It also indicates that part-time workers are more likely to be poorly paid, irrespective of gender, with 14.1 per cent of men and 19.1 per cent of women in part-time employment falling into the lower paid group. A woman working part-time is more than five times more likely to be poorly paid than a full-time female counterpart.

Although overall employment growth was not affected greatly by the legislation, it appears that growth has been reduced in firms that would traditionally have employed more low-wage workers. However, firms in this sector were more likely to report an improvement in the quality of their output, productivity and general staff morale.

The study was based on a survey of Irish firms carried out in late 2000/early 2001. Its aim was to assess the effect of the mandatory minimum wage, introduced in April 2000. The results of the survey were compared with those of a similar survey carried out a year earlier.

The national minimum wage is currently set at €5.97 per hour.