AMONG THE RAFT of measures introduced in this week’s Budget was a 10-cent increase in the hourly minimum wage, from €9.15 to €9.25.
During the many hours of post-announcement discussion was a dispute on Tuesday’s Late Debate on RTE Radio One, over the number of workers who are on the minimum wage.
Minister of State for Food, Forestry and Horticulture, Fine Gael’s Andrew Doyle, claimed that ”3% or 4% of…the working population” are on ”the basic minimum pay”.
AAA-PBP TD Bríd Smith rejected this, and claimed “25% of the working population are on the minimum wage”.
They can’t both be right, so we set out to find the true number of workers on the minimum wage, and evaluate both claims.
(Send your FactCheck requests to factcheck@thejournal.ie, tweet @TJ_FactCheck, or send us a DM).
You can listen to the exchange on minimum wage in the video below, or listen to the episode in full, here.
Claim 1: 3-4% of the working population are on the minimum wage – Andrew Doyle
Verdict: UNPROVEN
Andrew Doyle’s claim was:
The balance here is to strike something that represents an increase in the basic minimum pay, which 3% or 4% of the working population are on…
In response to FactCheck’s request, Andrew Doyle cited a July 2016 report by the Nevin Economic Research Institute (NERI).
That research used data from the CSO’s Survey on Income and Living Conditions (SILC) in 2014.
Based on the results of the survey, which involved 5,486 households and 14,078 individuals, the NERI research extrapolated (using robust statistical models) that 5% of employees (an estimated 69,294) earned around the minimum wage (i.e. within 5% either way), which was €8.65 at the time.
With 3.6% (50,364) earning below that threshold, the NERI research concluded that 8.6% of employees (119,658) earned up to or around the minimum wage in 2014.
In its submission to the Low Pay Commission, the Economic and Social Research Institute (ESRI) also used data from the SILC.
That research found that when the newer minimum wage of €9.15 per hour is applied, some 8.7% of workers earned below that level in 2014, and a total of 11.56% of employees were earning up to or around the minimum wage.
So the ESRI research suggests that, in 2014, some 2.86% of employees were on the minimum wage that was introduced in 2016 (i.e. earned within 5% of it, in either direction).
Problems
There are a couple of things to note, here. Firstly, we are unable to obtain the raw data that formed the basis of these calculations, as they are restricted to universities, research institutes, and so on.
Secondly, the SILC applies only to employees whose principal economic activity is work.
So the self-employed, students or pensioners who work a few hours a week, for example, and other types of workers, are not included in these calculations.
The figures in the 2014 SILC refer to the period between January 2013 and December 2014. According to the NERI report (page 6), the number of employees of whom the results of the SILC are representative was 1,396,489.
However, during the same period, the average number of persons “in employment” (i.e. not just employees), was 1,897,525, according to our analysis of data from the CSO’s Quarterly National Household Survey.
So the results of the 2014 SILC, and therefore the NERI and ESRI analysis of them, are representative of roughly 74% of all those regarded as “in employment”.
This doesn’t mean that the figures on minimum wage are wrong. Just that they should only really be used to describe “employees” and not “the working population”, as Andrew Doyle did on the Late Debate.
We also don’t know the proportion of non-employees who are on the minimum wage, because there isn’t similar data for them, which is as detailed as the SILC, in this respect.
Furthermore, the data Doyle cited applies to 2014. Since then, the minimum wage has increased from €8.65 to €9.15.
Naturally, the number of workers earning up to that amount will have increased since then, especially as employers became legally obliged to increase pay rates to that level in 2016.
So it seems likely that the proportion of employees currently earning up to or around the minimum wage of €9.15 is higher than the ESRI’s figure of 11.56% for 2014.
And the number earning up to the new rate of €9.25 will be higher still.
However, it should be stressed that Doyle’s claim was that 3-4% of workers are on the minimum wage, not earning up to the minimum wage.
Ultimately, we do not have the data required to be able to evaluate the proportion of employees (or all workers) in 2016, who earn around, or up to, either the present minimum wage of €9.15, or the incoming minimum wage of €9.25.
For that reason, we rate Andrew Doyle’s claim UNPROVEN.
Claim 2: 25% of the working population are on the minimum wage – Bríd Smith Verdict: UNPROVEN
Bríd Smith’s claim was:
25% of the working population are on the minimum wage.
In response to our request for evidence, she said:
The figure of 25% of workers earning the minimum wage was a mistake on my part, as I conflated a number of different issues during the debate…
Smith told FactCheck that she was, in fact, referring to recently published figures for the prevalence of low paid workers, rather than workers earning up to the minimum wage.
The figure I was quoting was from a recent Unite report on the prevalence of low pay, which suggested that over 23% of all employees fall into the “low pay” category.
The report, published by the Unite trade union in June, cited OECD data for 2013 which found that 23.3% of full-time employees in Ireland fell into the category of “low pay” – that is, earned less than two-thirds the median income.
The median income is the income which 50% of employees earn more than, and 50% earn less than.
The same OECD data found that in 2014, some 25.1% of employees in Ireland were low-paid, the highest prevalence of low pay out of 13 EU countries for which figures were available.
The low-pay threshold is above the minimum wage, so it’s effectively impossible that the proportion of employees earning up to the minimum wage in 2014 would also have been 25%, or anywhere close to it, according to this methodology.
However, the claim Bríd Smith made related to the “working population”, and not full-time employees only, which is what the OECD data (used by Unite) measures.
The best available systematic study which yields data relevant to the proportion of workers on the minimum wage is the SILC.
However, even that has the drawback of leaving out the roughly 26% of workers who are not employees, and the most recent SILC referred to 2014.
Bríd Smith acknowledges being mistaken in the way she phrased her claim, referring to minimum wage when she meant low pay.
And the recent ESRI showed that 11.56% of employees earned up to or around the minimum wage of €9.15, back in 2014.
Two years on, and after its introduction as the legal minimum wage in January, the proportion of employees earning up to or around €9.15 per hour is very likely to be even higher than 11.56%, but unlikely to be as high as 25%.
However, without data from the SILC for 2016, we cannot know the current percentage of employees (or extrapolate the likely current percentage of all workers) earning up to or around the minimum wage of €9.15.
Therefore we must also rate Bríd Smith’s claim, as it was articulated on the Late Debate, UNPROVEN.
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