Study to assess abolition of sub-minimum pay rules for teenage workers – The Irish Times

An assessment of the economic impact of abolishing sub-minimum pay rates for teenage workers is to be commissioned by the Government after the Low Pay Commission (LPC) recommended scrapping the reduced rates.

The LPC recommends removing the reduced rates after the start of next year, but suggests that subsequent reviews of the impact be carried out after two and four years to determine whether there has been a negative impact, particularly in regarding workers under the age 18 regime.

Currently, 19-year-olds must earn at least 90 percent of the National Minimum Wage (NMW) of €12.70, or €11.43 an hour, with 18-year-olds required to earn at least €10.16 and anyone under this age has the right to earn at least €8.89 per hour.

The majority of affected young workers work in the hospitality and retail sectors, although in a report published on Tuesday, the LPC suggested that three quarters of them already receive at least the full minimum wage. In total, 15,000 workers, two-thirds of whom are under 18, are actually affected by the minimum rates.

The LPC itself says the issue is “complex” and “will require extensive deliberation and review by government, and may require additional legal advice and consultation with stakeholders”.

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Responding to the report, Minister for Enterprise, Trade and Employment Peter Burke said the government would do all of this before proceeding, and would also assess the impact that abolishing the rates would have on SMEs before deciding on a course of action.

“This is an important and complex issue which will require detailed consideration by the government,” he said. “My department will now commission an economic impact assessment and seek legal advice on the recommendations of the Low Pay Commission,” he added.

The legal opinion will be needed to assess a suggestion from the LPC that the reduced rates would effectively contravene EU law under the Adequate Minimum Wage Directive which is to be transposed into Irish law by November this year.

Under the Directive, the LPC argues, any exception to wider universal minimum wage rates must be justified on the basis of a valid social policy objective. According to his legal opinion, reducing costs for employers would not be considered a valid justification.

This suggests that there is insufficient evidence that the previously stated policy goals of discouraging early school leaving and encouraging employers to provide training to young workers are being achieved through the below-minimum rates.

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Reacting to the release of the report and the minister's statement, Irish Trades Union Congress general secretary Owen Reidy said the government should immediately act on the report's recommendations.

“The minimum wage reduction rules for young workers do not comply with EU standards and law,” he said. “The review of the Low Wage Commission and its unanimous recommendation to abolish these commissions for all workers vindicates Congress's position. The government must act without delay.