Majority of 15-19 year olds who work get paid more than the sub-minimum wage

A new study has found that while nearly three quarters of employees aged 15-19 years old could legally be paid a rate below the minimum wage, they actually get paid more.

The research, conducted by the Economic and Social Research Institute (ESRI) and funded by the Low Pay Commission, also found that of the approximately 15,000 individuals who do receive a sub-minimum youth rate, around 80% classify themselves as students.

The current minimum wage in this country is €11.30 an hour, although this is due to increase to €12.70 in January.

But legally, employers are allowed to pay less than this to those aged under 20 years old.

Anyone under the age of 18 must receive at least 70% of the full adult minimum wage, those who are 18 must get at least 80% and those aged 19 must be paid 90%.

Once a person reaches 20 years of age, they have to receive the full adult minimum wage by law.

The results show just 5.6% or 120,000 employees in Ireland last year received the full-rate minimum wage, with 1.4% or 30,000 people being paid a sub-minimum wage.

The ESRI found just a quarter of those aged 15-19 who could be legally paid a sub-minimum rate are actually paid it, equating to just one in every 140 employees, or 15,000 individuals.

The balance are either paid a higher rate or the full minimum wage.

Just over half of those who do receive a sub-minimum youth rate are women, and more than three quarters work in either the accommodation, food or retail sectors.

"Sub-minimum youth rates in Ireland have received a lot of attention in recent months, as they have been criticised by some policymakers as being too low to allow a decent standard of living for young people," Dr Paul Redmond, an author of the report.

"Our research shows that very few employees are on a sub-minimum youth rate. Most young people who could legally be paid a sub-minimum youth rate are actually on higher pay."

Of those aged 15-19 years on a sub-minimum rate, an estimated 1,500 are employed by a relative, 6,500 are apprentices and a further 6,500 say they get below the minimum wage for "other reasons", which may include those who are being paid it illegally.

Under the law apprentices, those employed by a close relatives and prisoners involved in non-commercial work are exempt from the entitlement to be paid a minimum wage.

Of the 27 EU countries, just 22 has a statutory minimum wage, but only seven of those also has a sub-minimum youth rate.

The report says the main arguments in favour of sub-minimum wage rates for young people are that they can provide wage protection for young people who choose to enter the workforce and at the same time ensure wages are not set so high that they could discourage employers from hiring them, therefore supporting youth employment.

But on the other hand, the main argument against youth rates is that should be equal pay for equal work, and age should not be used as a means of discrimination.

The study finds that when the evidence on potentially abolishing sub-minimum youth rates is weighted up, it would result in around 15,000 young employees seeing an increase in their hourly wages in the order of 11-43%.

But at the same time it could lead to some of these young workers, the majority of whom are students, experiencing a reduction in their hours worked or employment.

"The Low Pay Commission has been asked to make recommendations on these youth rates," said Ultan Courtney, Chairperson of the Low Pay Commission.

"We make evidence-based recommendations, and this research will be of great importance to us in our consideration of this important issue and will inform our recommendations."

Maeve McElwee, the executive director of Employer Relations with Ibec, said it is not surprising that not all under 18s or 19s are being paid sub-minimum rates.

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Speaking on RTÉ's News at One, she said this was due to the strong economy and a "very tight labour market".

The jobs market remains strong, according to figures from the CSO today which show that the number of people unemployed rose only marginally in October to 4.8% compared to 4.7% in September.

Ms McElwee said the sub-minimum youth rate still offered an opportunity for employers and employees, particularly in sectors like retail and the experience economy.

"Those who are under 18 where they are eligible to work may not be able to carry out the full range of duties. For example, in a retail environment, you cannot sell alcohol or cigarettes if you are under 18, so you cannot carry out the full range of duties," she explained.

"Having the sub-minimum rates there does actually provide opportunities for younger people to be able to enter the workforce even if though they might not be eligible to carry out all of the work that would be required of them," she added.

She added that the Government policy to achieve a living wage by 2026 meant there would be a substantial increase in the national minimum wage.

This would mean that sub-minimum rates will become increasingly important to employers, she added.