Through its budget standards research the VPSJ recognises the inadequacy of the National Minimum Wage for many household types. Earnings below the Living Wage do not allow for a Minimum Essential Standard of Living, and means individuals are faced with having to do without essentials in order to make ends meet.
The Living Wage is the average hourly gross salary required by a single individual (without dependents) in full-time employment to afford a socially acceptable minimum standard of living across Ireland.
The cost of core items needed for an acceptable minimum standard of living fell this year. The price of food, clothing, health insurance and social inclusion all reduced in 2017. Electricity and natural gas prices also brought a drop in urban household energy costs, although rising home heating oil prices impacted on rural households. Additionally, changes to the Universal Social Charge (USC) increased net pay for a person earning the Living Wage, when compared to 2016.
These savings are undone by rising rents, and the overall cost of a socially acceptable minimum standard of living increased by an average of 2% for a single adult working age household.
Rents in Dublin account for almost half (47%) of a single person’s minimum costs. Since 2014 (the first year the Living Wage was calculated) rent for a single person in Dublin has increased by 30%, while outside of Dublin rental costs have risen by up to 10%.
To date, the full impact of rising rents has been counter balanced, to some degree, by falling costs in other areas of essential expenditure, for example food and electricity. However, it is unlikely that such price reductions will continue to act as a break on increases in the Living Wage needed in coming years. Consequently, increases in the cost of a minimum standard of living, driven by rising rents, could necessitate further increases in the Living Wage in order to keep pace.
Further details on the Living Wage and on the methodology used to calculate the hourly Living Wage rate can be found on www.livingwage.ie