The Low Pay Commission published its recommendations for the National Minimum Wage (NMW) on 18th July. As outlined in the publication, the primary aim is "to have a minimum wage that provides an incentive to work, is set at a rate that is both fair and sustainable, and helps as many people as possible, without a significant adverse effect on competitiveness or a significant negative effect on employment".
The key recommendations in the report include:
• The NMW for an experienced adult worker should be increased from €9.55 to €9.80 gross per working hour,
• The anomaly created by the increase in the rate of employer's PRSI from 8.6% to 10.85% on weekly earnings in excess of €376 should be removed. The Commission is of the view that "this issue has reached a critical juncture given the recommended increase in the NMW, and stresses the need for the Government to address this issue", and
• Provision should be made for the display of basic entitlements in all places of employment where the minimum wage is in operation.
Based on the prevailing rates of tax, PRSI and USC for a single person working a 39 hour week on the NMW:
• An increase of 10 cent in the NMW to €9.65 per hour would generate a net gain to the employee of approximately €110 per year while costing the employer an additional €660, which is approximately 6 times the benefit to the employee, or
• An increase of 25 cent in the NMW to €9.80 per hour as recommended by the Low Pay Commission would generate a net gain to the employee of approximately €277 per year while costing the employer an additional €997, which is approximately 3.6 times the benefit to the employee, hence the recommendation to remove the anomaly created by the increase in the rate of employer PRSI.