There is no evidence that raising the minimum wage in Ireland causes low-paid workers to lose their jobs, a new study has found.
Some critics have argued that raising minimum hourly pay rates can have a negative impact on employment and recruitment as it adds to company costs.
But new research from the Economic and Social Research Institute (ESRI) found that the 10 successive increases to the minimum wage adopted here between 2016 and 2025 did not coincide with a higher likelihood of minimum-wage employees becoming unemployed.
The State’s minimum wage has increased by 56 per cent in the past 10 years, from €9.15 an hour in 2016 to €13.50 an hour this year, with the largest increase, of 12.4 per cent, coming in 2024.
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Utilising data from the quarterly Labour Force Surveys, which identify the number of employees earning the statutory minimum wage, the ESRI found that hikes to the State’s minimum legal pay did not cause a higher likelihood of minimum-wage employees moving to non-employment in the six-month period following the increase.
It noted that while minimum-wage employees are generally more likely to enter non-employment than higher-paid workers, “the likelihood of this happening did not increase following increases to the minimum wage”.
An additional feature of the Irish minimum wage system is the presence of age-based sub-minimum youth wage rates for those aged under 20.
The ESRI said it did not find evidence that younger workers in this “ageing into” category experienced an increased likelihood of job loss in the quarter directly following their birthday, in other words when they moved up the sub-minimum scale.
[ Minimum wage increase led to reduced hours for staff, ESRI findsOpens in new window ]
However, it said there was “weak evidence” of varying impacts over time while noting in the pre-pandemic period there was evidence of increased job losses for sub-minimum youth wage employees that age into a higher minimum wage band.
But the evidence was based on statistically small sample sizes, it said.
“It is important to monitor whether increases to the minimum wage result in negative employment effects for low-paid workers,” the report’s author, Paul Redmond, said.
“In this study, we find that recent minimum wage increases, which occurred during a period of strong economic growth and low unemployment, did not increase the likelihood of minimum-wage employees losing their jobs.”
The ESRI’s study noted that there were “several potential channels of adjustment by employers following a minimum wage increase” including the possibility of employers laying off existing minimum-wage workers.
Other channels of adjustment related to reductions in hiring new staff, reductions in hours, a reduction in profits or an increase in prices, it said.
While previous studies have found evidence of reduced hours following a minimum-wage increase in Ireland, the remaining channels of adjustment for Irish firms remain “relatively under-researched”.
