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|---|---|
| In Ireland, the National Minimum Wage (NMW) is a legally binding rate set by the government, guided by the recommendations of the Low Pay Commission. By contrast, the Living Wage has historically been a voluntary benchmark, championed by the Living Wage Technical Group. This rate is calculated based on the Minimum Essential Standard of Living (MESL) research, reflecting the hourly income required to afford a basket of basic goods and services and maintain social inclusion. | 1–7 |
| For 2023, the voluntary Living Wage was calculated at €13.85 per hour, whereas the statutory NMW stood at €11.30 per hour for an adult worker. For a standard 39-hour working week, this difference represents a significant gap in gross earnings. In comparison, the median hourly wage across the Irish economy was estimated to be around €22.00, meaning many low-paid retail, hospitality, and agricultural workers fell well below the national average. | 8–13 |
| Proponents of mandating the living wage argue that low-wage employers are effectively subsidised by the state, which pays out welfare supports such as the Working Family Payment to top up low incomes. However, business representative groups, particularly those representing small-and-medium enterprises (SMEs), warn that making the living wage legally binding will lead to business closures, reduced hours, or increased consumer prices. | 14–19 |
| To address this, the government announced a phased transition to replace the NMW with a statutory National Living Wage by 2026, set at 60% of the median wage. This transition will occur alongside changes to statutory sick pay and pension auto-enrolment. Economists continue to debate whether the cumulative impact of these reforms will genuinely enhance the purchasing power of low-paid workers or inadvertently trigger wage-price spirals. | 20–25 |
‘The living wage is calculated to reflect the minimum income standard required for an individual to meet their physical, social and psychological needs.’ (Extract G, lines 5–7).
Using the data and your knowledge of economics, assess whether the Irish government should proceed with its plan to legislate a mandatory living wage for all adult workers, or whether there are better alternative strategies to support the living standards of low-paid workers.
64 exam-style questions on AQA A Level Economics 1.6 The labour market (A-level only), covering 1.6.1 The demand for labour, marginal productivity theory, 1.6.2 Influences upon the supply of labour to different markets, 1.6.3 The determination of relative wage rates and levels of employment in perfectly competitive labour markets, 1.6.4 The determination of relative wage rates and levels of employment in imperfectly competitive labour markets, 1.6.5 The Influence of trade unions in determining wages and levels of employment, 1.6.6 The National Minimum Wage, and 1.6.7 Discrimination in the labour market. Each one has a worked solution and a mark scheme showing where the marks go.