Tánaiste announces introduction of national living wage

man checking wallet

The Government has agreed to the introduction of a new national ‘living wage’ to replace the minimum wage by 2026.

The national living wage will be set at 60% of hourly median wages in line with the recommendations of the Low Pay Commission. It will be introduced over a four-year period and will be in place by 2026, at which point it will replace the National Minimum Wage.

The first step towards reaching a living wage will be the 80 cent increase to the National Minimum Wage from 1 January 2023 to €11.30 per hour. This will be followed by gradual increases to the National Minimum Wage until it reaches 60% of hourly median earnings. In 2023, it is estimated that 60% of median earnings would equate to approximately €13.10 per hour.

In 2021, there were 164,000 people earning the National Minimum Wage. All of these workers can now expect an increase in their pay and it is expected that more will benefit from knock-on increases.

Research undertaken by Maynooth University on behalf of the Low Pay Commission has provided evidence that a wage floor set at 60% of hourly median wage can raise workers’ wages without adverse effects on hours worked and employment.

Once the national living wage has come into effect in 2026, subject to an assessment of the impact of the change, the Low Pay Commission will advise on the practicalities of gradually increasing the targeted threshold rate towards 66% of the hourly median wage.