Lower minimum wage rates are outdated, out of line with EU norms and law and grossly unfair to young workers and good employers writes our social policy officer, Dr Laura Bambrick.
The minimum hourly wage is the lowest rate of pay an employer can legally pay their workers. It is currently set at €10.50 for each hour worked. However, this rate only applies to workers aged 20 and older. The law guarantees younger workers just a fraction of the minimum wage. For young adults aged 19 the wage floor is 90% the minimum wage (€9.45), for those aged 18 it is 80% (€8.40) and for workers aged 17 and under it is 70% (€7.35).
Some readers will no doubt be thinking that this is ok because young people aren’t generally responsible for the bills to run a home. That they have fewer qualifications and are less productive. That they are not as reliable and they need more supervision. That paying them the full rate would bankrupt business and cost them their job.
These are the same arguments that were made in the 1970s in opposition to equal pay legislation. Today we would baulk at the idea of a business being permitted to have one rate of pay for men and another lower rate of pay for women who work side by side doing the same job. Yet we continue to condone this raw deal for young workers.
There is no justification for two people doing the same work and liable for the same taxes on their earnings being paid a different rate for the job just because of their age.
Thankfully most businesses voluntarily and by negotiation with trade unions pay young employees no less than the full minimum wage. But it is unacceptable that the law allows pay discrimination by age and for good employers to be undercut by bosses benefitting from subminimum wage rates.
Living Wage
The minimum wage will soon undergo the biggest change in its 23-year existence. In anticipation of a new EU-wide law to ensure adequate wages for workers across the bloc, Government is at an advanced stage of planning to set a target for the minimum wage to equal 60% of the median hourly wage. The €10.50 minimum wage is currently 52% of median hourly earnings in the economy (€20.29).
Throughout our engagement on moving to the new so-called living wage, the Irish Congress of Trade Unions has been firm in our position that no worker should be paid less than the living wage.
Ireland is one of only a small handful of member states to continue to have age-based rates in their minimum wage for young workers. If the majority of countries are able to guarantee them the same minimum rate of pay as older workers, why can’t we?
EU Legislation
European employment equality law allows for age discrimination in minimum wages, but only if the discrimination fulfils a legitimate aim. Justification of the discrimination must be specific and based on evidence.
Conventional wisdom has it that a lower minimum wage for young people prevents them from dropping out of education because the pay is unattractive and prevents high levels of youth unemployment among those who do enter the workforce as employers are more willing to hire them.
But what is the evidence to support this?
Taking an in-depth look, the ESRI found the effects of minimum wage policy on young peoples’ employment or continued education decisions to be “small and weak, and sometimes statistically insignificant”.
Next Steps
The Low Pay Commission didn’t agree with the trade union's position that it is long overdue for them to go and instead recommended that sub-minimum wage rates be retained for young workers in the new living wage.
They did however recommend further research to examine the issue. Based on the findings they will make a recommendation for a Government decision on retaining, removing or expanding sub-minimum wage rates to young adult workers up to age 23.
The Irish Congress of Trade Unions has called for this to be done without delay. We will engage fully with the process and continue to press for abolishing subminimum youth wage rates and for a genuine living wage for all workers.
Dr Laura Bambrick is Social Policy Officer at the Irish Congress of Trade Unions.
