However, they noted that the minimum wage remains €2.05 below the actual Living Wage, which is now calculated at €14.75 per hour.

The Living Wage represents the hourly pay needed by a full-time worker without dependents to cover essential goods and services required for a basic, decent standard of living.

This figure, calculated by the Living Wage Technical Group (LWTG), is based on research by the Vincentian MESL Research Centre at the Society of Saint Vincent de Paul (SVP) and is designed to reflect the true costs faced by workers in Ireland.

Dr. Micheal Collins, Assistant Professor of Social Policy, highlighted that this is the first time the Living Wage has decreased since the LWTG began its calculations a decade ago.

Over the past year, living costs increased in eight of the expenditure categories used in the calculation, while decreasing in seven. Education (+6.6%), housing (+6.2%), and car insurance (+4.5%) saw the biggest increases.

Although food prices rose by 1.5%, this follows a substantial 21% hike in the previous year. The largest increase in cash terms was rent, which went up by €12.28 per week, reaching €210.60.

On the other hand, household energy costs dropped significantly (-16.6%), along with health costs (-4.8%) and household services (-4%).

The LWTG also emphasized the role of recent tax changes, particularly the Rent Tax Credit of €750, in boosting the net incomes of lower-paid workers.

As a result, the total amount of income tax, USC, and PRSI paid by a Living Wage worker fell from €71.58 per week to €61.16 per week, a reduction of €10.42, largely driven by the tax credit.

Robert Thornton, research manager at the Vincentian MESL Research Centre and a member of the LWTG, explained that despite rising costs in areas such as food and rent, lower energy prices and tax reforms have kept the latest Living Wage calculation nearly unchanged compared to last year.

However, he pointed out a significant gap remains, with the current National Minimum Wage of €12.70 still more than €2 below the evidence-based Living Wage of €14.75.

Dr. Collins noted that recent policy interventions have clearly influenced the Living Wage. Without the Rent Tax Credit, the hourly rate would be 50 cents higher, and without the temporary cost-of-living electricity credits, it would be 20 cents higher.

“Though the reduction is small, it demonstrates the positive effect of government efforts to make costly goods and services more affordable for low-income workers,” he said.

According to data from the 2017 Survey of Income and Living Conditions, one in four employees earned less than the 2017 Living Wage of €11.70.

For full-time workers, this figure stood at one in five, considering employees across all household types, not just single adults.

The government has committed to gradually replace the minimum wage with a national living wage by 2026, targeting 60% of the median wage in any given year.

As of January, the minimum wage is €12.70 per hour. The Central Statistics Office reported that median earnings in 2022 were €41,823 annually.