The living wage should rise to €14.80 an hour from its current rate of €13.85 per hour to compensate workers for inflation, an advisory group has said.
The Living Wage Technical Group (LWTG) was set up in 2014 by trade unions and charities to lobby for a wage it believes allows a full-time worker (without dependants) to afford the goods and services that people have agreed are essential for enabling a life with dignity.
The recommended living wage of €14.80 per hour represents a 6.9 per cent (€0.95 per hour) change from the 2022/2023 rate of €13.85 per hour. It is higher than the €13.80 threshold recommended by the Government’s living wage which is 60 per cent of the median wage by 2026.
The LWTG’s proposed living wage rate is based on budget standards research undertaken by the Vincentian MESL Research Centre at SVP, and reflects the real costs faced by employees in Ireland, the group says.
The change to the annual living wage rate is determined by changes in living costs and income taxes.
Over the past year living costs have increased for most areas of expenditure included in the Government’s living-wage calculation. Within this, rising energy costs (+23 per cent) and food costs (+21 per cent) added €23 to the price of the average weekly basket. This significant pressure fuelled two-thirds of the required increase in the living wage rate.
Other areas of weekly expenditure which also grew notably include personal care (+9.2 per cent) and clothing (+5.9 per cent). Transport-related costs decreased slightly (-2.0 per cent).
Rent increases continue to be a significant factor pushing up the living wage rate, and increased by an average of 7.0 per cent (almost €13 per week). The new Rent Tax Credit has limited the impact of rising rents on the living wage rate required. Without the rent tax credit the hourly rate would have risen by a further €0.35 to €15.15.
The living wage is based on price levels at the time of calculation (changes up to March 2023).
While the rate of inflation has reduced over recent months, the LWTG states that the living costs remain exceptionally high and official forecasts do not anticipate a return to earlier price levels.
It is estimated that approximately one-in-five full-time workers are earning less than the living wage in Ireland and the gap between the national minimum wage (€12.70 per hour in 2024) and the living wage will be €2.10 per hour next year.
Vincentian MESL Research Centre manager Robert Thornton said their calculations are based on a set of “similar figures which reflect a belief across societies that individuals working full‐time should be able to earn enough to enjoy a decent standard of living and meet minimum essential living costs.
“Having an income below this standard of living means doing without goods and services which are essential for taking part in the norms of everyday life in Ireland.”