Living wage: Ireland wants to be world’s leader – but could crush small businesses

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Article in The Conversation

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COVID-19 has brought the living wage debate back into focus, particularly since many essential workers are the lowest paid in society. Numerous major companies such as Ikea and Unilever now pay a living wage, as does the Scottish government.

Ireland, however, could soon go one step further. The Irish government has tasked its Low Pay Commission with examining how a living wage could be introduced across the republic. Due to report later in the year, the Commission could enable Ireland to become the first nation to require all businesses to pay a true living wage, raising all wages from the minimum wage of €10.20 (£8.81) an hour to €12.30 (£10.61) an hour.

As in many countries, the living wage is currently optional in Ireland, with some employers such as Lidl and Aldi making a virtue out of paying it. A republic-wide living wage sounds laudable from the perspective of workers’ entitlements, particularly at a time of rising inflation. On the other hand, Irish business groups argue that the timing is poor considering how businesses have been hit by the pandemic.

While many elsewhere will be watching closely to see how this develops, there is a danger of going too far. The living wage can have unintended consequences and detract from better ways in which government policies can improve people’s living standards.