Many minimum wage workers who have lost their jobs are better off on welfare if receiving the €350 per week Covid-19 Pandemic Unemployment Payment, according to a new study by the Economic and Social Research Institute.
Around 8% of employees in the Irish workforce are currently on the minimum wage of €10.10 per hour.
Of those, more than half work in the retail, accommodation and food sectors, which have experienced widespread business closures during the coronavirus crisis.
Minimum wage earners are also more likely to be women, work part-time, be non-Irish nationals, and aged 15-24.
The ESRI report notes that the flat-rate €350 Pandemic Unemployment Payment, introduced on 16 March to address the surge in unemployment, is higher than the gross weekly wage of most minimum wage employees, particularly those working part-time.
"Given that minimum wage employees generally work fewer hours, the PUP payment is 50% higher than the gross weekly wage of the average minimum wage employee in the retail and accommodation and food sectors," said the report's author, Dr Paul Redmond.
However, he notes that the PUP payment was introduced as a temporary 12-week emergency measure, adding that "current indications are that it may be changed or tapered in the coming weeks".
This afternoon, Taoiseach Leo Varadkar told the Dáil that the €350 payment to people who have lost jobs due to the Covid-19 pandemic will be extended beyond mid-June.
He said there had been no decision regarding a new rate or a timeline, and that a decision may have to be taken by a new government.
Dr Redmond also highlights that serious policy issues in relation to the minimum wage will have to be addressed over the coming year.
"The key policy question over the next 12 months will be whether the minimum wage should be increased, decreased or remain the same.
"The evidence shows that minimum wage changes have little effect on employment. We also know that changes to the minimum wage impact wage inequality. These are issues that will need to be considered by the Low Pay Commission and policymakers in the coming months," he states.
Dr Redmond's overview of minimum age policy in Ireland over the last 20 years notes that for many employees, the minimum wage acts as a stepping-stone to higher pay.
However, others stay on the minimum wage for longer periods of time and are reliant on statutory increases in the minimum wage to boost their income.
It finds that increases in the minimum wage here have not led to job losses among those earning the minimum wage, but have resulted in some reductions in hours worked.
It also notes that the 2016 rise in the minimum wage triggered reductions in wage inequality - and that the minimum wage is particularly important in keeping wage inequality low during a recession.
