In principle, a living wage is intended to establish an hourly wage rate that should provide employees with sufficient income to achieve an agreed acceptable minimum standard of living. In that sense it is an income floor; representing a figure which allows employees afford the essentials of life.

Earnings below the living wage suggest employees are forced to do without certain essentials so they can make ends-meet. This living wage is the average gross salary which will enable full time employed adults (without dependents) across Ireland to afford a socially acceptable standard of living.

The difference between this and the National Minimum Wage is that the minimum wage rate is not based on the cost of living. The national living wage for Ireland is calculated to be €12.90 per hour.