Living Wage 2025: A Fairer Future for Workers

The Living Wage Technical Group, of which Social Justice Ireland is part has called for the introduction of a real living wage of €14.75 per hour. The new rate represents a small decrease of 5c per hour over the 2023/24 rate (€14.80) - a change driven by the impact of temporary cost-of-living measures on living costs. 

 

Addressing low pay remains a key challenge for Irish society. As we have continuously highlighted, the annual poverty figures show approximately 145,000 people in employment are living in poverty (the working poor). Improvements in the low pay rates received by many employees offer an important method by which these levels of poverty and exclusion can be reduced.

What is a Living Wage?

In principle, a Living Wage is intended to establish an hourly wage rate that should provide employees with enough income to achieve an agreed acceptable minimum standard of living. In that sense it is an income floor, representing a figure which allows employees to afford the essentials of life.

The call for the introduction of a Living Wage for Ireland reflects a belief that individuals working full-time should be able to earn enough income to enjoy a decent standard of living. The Living Wage is a wage which makes possible a minimum acceptable standard of living. Its calculation is evidence-based and built on budget standards research which is grounded in social consensus. The new figure is:

• based on the concept that work should provide an adequate income to enable individuals to afford a socially acceptable standard of living;
• the average gross salary which will enable full time employed adults (without dependents) across Ireland to afford a socially acceptable standard of living;
• a rate that provides for needs, not wants;
• an evidence-based rate of pay which is grounded in social consensus and is derived from Consensual Budget Standards research which establishes the cost of a Minimum Essential Standard of Living in Ireland;
• based on the cost of living, unlike the National Minimum Wage, which is not – and never has been – set or benchmarked relative to any measure of the cost of living.

In principle, the Living Wage is intended to establish an hourly wage rate that should provide employees with enough income to achieve an agreed acceptable minimum standard of living. Earnings below the Living Wage suggest employees are forced to do without certain essentials so they can make ends meet.

How is the Living Wage Calculated?

The Living Wage is set by the Living Wage Technical Group (LWTG) based on research identifying the Minimum Essential Standard of Living (MESL) in Ireland, conducted by the Vincentian MESL Research Centre at the SVP. This research establishes a consensus on what members of the public believe is a minimum standard that no individual or household should live below. Where necessary the core MESL data has been complemented by other expenditure costs for housing, insurance and transport. The calculation of the Republic of Ireland Living Wage is focused on a single adult household. A more detailed account of the methodology used to set the Living Wage has been published in an accompanying Technical Document.

The Living Wage differs from the Government’s Living Wage which adopts a fixed threshold approach as opposed to the “basket of good” approach used by the LWTG. The Government’s living wage will be set at 60% of the median wage by 2026. As a means of moving towards this benchmark the statutory Minimum Wage is expected to increase to €13.70 per hour in 2025 (Budget 2025 will confirm the new rate).

Key Changes over the past year 

As the Living Wage is calculated based on the cost of the expenditure categories and on the basis of the post-tax and benefits income an individual receives, it is only changes to these that determine a change in the annual rate. Compared to last year, living costs increased for eight areas of expenditure included in the calculation and decreased for seven. Overall, weekly expenditure needed to increase by 1.7% (€8.74/week) to continue to meet the minimum standard. Over the past year tax changes, particularly the Rent Tax Credit, played an important role by increasing the net (after-tax) incomes of low paid workers. The combined amount of income tax, USC and PRSI paid by a Living Wage worker reduced from €71.58/week to €61.16/week, a reduction of €10.42, mostly driven by the Rent Tax Credit. These changes are greater than the increase in expenditure costs, meaning that the hourly income a Living Wage worker needs to earn to be able to afford the minimum living standard is 5c per hour lower in 2024/25.

Paying low-paid employees a Living Wage offers the prospect of significantly improving the living standards of these employees. Social Justice Ireland has supported the emergence of this concept over the past few years and we hope to see this new benchmark adopted across many sectors of society in the years to come.