46. Deputy William Aird asked the Minister for Enterprise, Tourism and Employment if he has engaged with the Low Pay Commission regarding concerns that the current methodology for calculating the living wage, based on 60% of median earnings, may disproportionately reflect earnings levels in high-paying multinational and technology sectors; and whether a review of the methodology is under consideration. [67454/26]

The Government's approach to the Living Wage, based on 60% of median hourly earnings, was adopted following detailed consideration and recommendations by the Low Pay Commission, supported by independent research. The 60% of hourly median wages benchmark, is an internationally accepted benchmark and provides a transparent, consistent and objective measure of the adequacy of the minimum wage. Eurostat data show that eight EU Member States had minimum wages at or above 60% of median gross earnings in 2024. The widespread use of the median wage as a reference point demonstrates that this is an established approach to assessing minimum wage adequacy across Europe.

The Low Pay Commission is an independent statutory body which makes recommendations to Government in relation to the National Minimum Wage. In doing so, the Commission is required to consider a broad range of economic and labour market factors, including employment, competitiveness, productivity and developments in earnings. Its objective is to assist as many low paid workers as is reasonably practicable while ensuring that the minimum wage remains fair and sustainable and does not have significant adverse consequences for employment or competitiveness.

The Living Wage methodology does not rely on earnings developments in any particular sector. In estimating median hourly earnings, the Commission draws on multiple data sources covering labour market earnings, including CSO Labour Force Survey data matched with PMOD earnings data derived from Revenue tax returns and the CSO Structure of Earnings survey. The Structure of Earnings Survey covers employments across almost all NACE sectors and includes variables relating to occupation, employment, hours worked and earnings. The Commission’s analysis also takes account of wage developments and wider economic forecasts from sources such as the Department of Finance, Central Bank of Ireland and the European Commission. This provides a robust economy wide evidence base for the Low Pay Commission's work.

It is particularly important in this context to note that the 60% benchmark is based on median rather than average earnings. The median identifies the midpoint of the earnings distribution and is therefore less affected by higher earnings at the upper end of the wage distribution. An increase in the earnings of those already above the midpoint does not, in itself, increase the median. This is an important feature of the current methodology. Using median hourly wages ensures that the Living Wage benchmark reflects broad developments in earnings across the labour market rather than being driven by high levels of pay among a relatively small number of workers.

Data from the OECD also shows that the difference between mean and median disposable income in Ireland is similar to many other European countries meaning that wages are not significantly distorted by high earning individuals relative to EU counterparts. Using median hourly wages ensures the calculations underlying the National Minimum Wage and the target to reach a living wage reflects broad wage trends across the economy and are not distorted by very high earners.

It would not be appropriate to exclude particular sectors or regions from an economy wide measure of median earnings. The National Minimum Wage is a single national rate applying to all sectors and regions, and it is appropriate that its benchmark should be based on an objective measure of earnings across the economy as a whole. I am conscious of the cost of living pressures faced by workers, particularly those on lower incomes. These pressures are not confined to workers in any one sector and the movements in the cost of goods and services are experienced across the economy. Workers across sectors participate in the same national economy and are exposed to the same economy wide movements in the cost of goods and services.

The current methodology of the Low Pay Commission, the breadth of the evidence it considers, the use of multiple earnings data sources and the use of the median rather than the mean, all provide important inputs in the calculation of the living wage. There are no plans to seek a review of the methodology on the basis suggested in the Deputy's question.

The Commission will continue to review the trajectory to a Living Wage independently and to assess economic, earnings and labour market developments in making its recommendations to Government.