Housing Prices push up living wage

The Living Wage Technical Group, an organization that annually calculates the wage required to support an acceptable standard of living in Ireland, recently published it’s 2017 report, listing the living wage as €11.70 an hour. This new rate is €0.20 higher than the previous rate and €2.45 higher than the actual minimum wage in Ireland.

 

The Living Wage Group defines the living wage as a rate that “provides employees with sufficient income to achieve an agreed acceptable minimum standard of living”. It is calculated to account for the price of various necessities such as clothing, food, housing, healthcare, and education. Out of these factors, many experts have attributed rising housing prices as the main reasons behind the need for higher wages.

 

In its 2017 report, the Living Wage Group supported this reasoning and published that “the current housing crisis, and associated increases in rent levels, has been the main driver of the increased wage rate”. The average house price in Ireland has risen 11.2% over the past year, with areas such as Dublin seeing even greater increases in both housing price and rent. Furthermore, MyHome.ie, a website that hosts property listings, now reports that house prices are rising by an average of €4,000 a month.

 

This trend is highly unsustainable if it were to persist, since wages are often tied to contracts and cannot as quickly respond to reflect increases in living expenses. Because rent and mortgage payments account for a huge proportion of a person’s living costs, almost 50%, many people earning Living Wages in the past will now themselves in more inflexible situations.  quickly rising home prices will cause more people earning Living

 

The report did mention that the cost of food, clothing, health insurance and gas have all lowered, making it more feasible for people on the margins of the minimum wage to afford a standard living. However, this means that the rise in housing prices has contributed much more than its fair share to the new higher Living Wage.

 

https://www.irishtimes.com/business/economy/soaring-cost-of-housing-blamed-for-hike-in-suggested-living-wage-rate-1.3143421

https://www.livingwage.ie/

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