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Policy measures cause Living Wage to fall by 5c per hour, but the minimum wage is still €2.05 below the real Living Wage of €14.75.
The 2024/25 Living Wage has been calculated by the Living Wage Technical Group (LWTG). The new rate, of €14.75 per hour represents a small decrease of 5c per hour over the 2023/24 rate (€14.80) - a change principally driven by the impact of policy measures. However, a considerable gap of €2.05 remains between the National Minimum Wage and the Living Wage.
The Living Wage is the minimum hourly pay required for a full-time worker (without dependents) to afford the goods and services that people have agreed are essential for enabling a basic, yet decent, standard of living. Its calculation by the Living Wage Technical Group (LWTG) is evidence-based, building on budget standards research undertaken by the Vincentian MESL Research Centre at SVP, and reflects the real costs faced by employees in Ireland. The change to the annual Living Wage rate is determined by changes in these living costs and income taxes.
Over the past year, living costs have increased for eight areas of expenditure included in the calculation while they have decreased for seven. The largest changes were increases in costs for education (+6.6%), housing (+6.2%) and car insurance (+4.5%) and decreases in household energy costs (-16.6%), health costs (-4.8%) and the cost of household services (-4.0%). Food costs rose a further 1.5%, on top of a 21% increase in the previous year. The largest cost increase in cash terms was rent, which rose by €12.28/week to reach €210.60/week.
Tax changes in the last budget, particularly the Rent Tax Credit, played an important role by increasing the net (after-tax) incomes of lower paid workers. The combined amount of income tax, USC and PRSI that would be 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 (The Living Wage calculation is based on the assumption that lower income workers rent).
Robert Thornton, Research Manager with the Vincentian MESL Research Centre and a member of the Living Wage Technical Group said: “The latest calculation of a Living Wage is nearly identical to last year, despite higher costs in some areas like food and rent, because of a combination of lower energy costs and tax changes made in the last budget. Nonetheless, there is still a significant gap of over €2 between the evidence-based Living Wage of €14.75 and the current National Minimum Wage of €12.70.”
Dr Micheál Collins, a UCD Academic and member of the Living Wage Technical Group said: “This is the first time the Living Wage has fallen since the Technical Group started calculating it a decade ago. Recent policy measures have had a clear impact on the rate - without the Rent Tax Credit, the hourly rate would be 50c higher; without the temporary cost-of-living electricity credits the rate would be 20c higher. Although small, the decreased hourly rate shows the effects when government takes steps to make expensive goods and services more affordable to people on lower incomes”.
