The Living Wage should rise by 60 cents to €12.90 an hour, the group which calculates it has recommended.

The increase is being driven by hikes in rents, transport and energy costs, according to the Living Wage Technical Group (LWTG).

A Living Wage is intended to be a benchmark hourly rate that should provide employees with sufficient income to achieve an agreed acceptable minimum standard of living.

While not legally binding, a number of employers have committed to paying a Living Wage.

It is not connected to the national minimum wage which stands at €10.20 and is legally enforceable.

"It represents the minimum required to meet physical, social and psychological needs, and enable a life with dignity," said Robert Thornton, VPSJ Senior Research and Policy Officer and a member of the LWTG.

"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."

The LWTG estimates approximately one-in-five full-time workers are earning less than the Living Wage in Ireland.

The Living Wage rate for Ireland was first calculated in 2014 at €11.45 an hour by the LWTG.

It is made up of researchers and academics from St Vincent de Paul, the Nevin Economic Research Institute, SIPTU, Social Justice Ireland, TASC, Unite and is conducted by the Vincentian Partnership for Social Justice (VPSJ).

The LWTG said rents account for 3.9 percentage points of the 4.9% increase.

It says Dublin housing costs now account for 64.7% of a Living Wage net salary, based on the 2021/22 rate.

The group added that energy prices for home heating and transport have also risen and this has increased the upward pressure on costs for workers.

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Food, clothing and car insurance, have however decreased in price, off-setting slightly these price increases.

The Programme for Government committed to progress to a living wage over the lifetime of the Government.

In January, the Tánaiste asked the Low Pay Commission to examine the issue and make recommendations to Government on how best to achieve this commitment.

SIPTU said that the rise in the Living Wage confirms the urgent need to give workers the right to collective bargaining.

"The increase in the Living Wage to €12.90 per hour reflects the continuing failure of government policy to bring rents under control and to provide employees with the right to bargain collectively," said SIPTU researcher, Michael Taft.

"In addition to bringing high living costs under control, especially rents, the Government must provide employees with the tools that would allow them to negotiate wages that can move them closer to the Living Wage."

"This means giving people in the workplace the right to bargain collectively with their employers. Employers must respect their employees' wishes to do so, as they do across the EU."

Meanwhile, Lidl Ireland says it has committed to meeting the new Living Wage for 2022.

It said the change will benefit 30% of its employees across Ireland, as all other employees currently earn in excess of the new Living Wage.