Private sector employers expect to wages to rise by an average of 2.9 per cent this year according to new research published on Thursday by CIPD Ireland at the annual Industrial Relations News conference in Dublin.
The figure is down from 3.3 per cent last year and 4.2 per cent in 2024, and well below the 4.7 per cent to 6 per cent target range set by the Irish Congress of Trade Unions for private sector pay increases this year.
The survey suggests growing caution among employers, with 59 per cent indicating they intend to increase pay this year compared with the 78 per cent that did so last year.
Almost half, however, anticipate increasing staff numbers while 14 per cent suggested they currently expect to cut jobs.
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Remote and hybrid working remains a big issue for employers, the research suggests, with close to two-thirds, 61 per cent, saying a shortage of housing is a significant impediment to recruitment and almost three-quarters saying it is helping to drive pressure from employees to work remotely.
The Department of Enterprise last week published a review of the code of practice on the right to request remote working in which it was concluded the current system is working well and that no legislative changes are needed. Those conclusions were disputed by unions.
“A clear downward trend in pay growth is emerging in the private and semistate sector,” said CIPD Ireland director Alison Hodgson. “While many employers still plan to raise pay, the pace of increases is slowing as organisations take a more cautious approach in the face of ongoing economic uncertainty.
“The housing crisis is also continuing to shape the labour market in a very real way. Employers are telling us that difficulties securing affordable accommodation are making it harder to attract and retain staff. As a result, flexible and hybrid working are becoming even more important tools for employers trying to access and keep talent.”
The integration of AI is identified as a big priority for 73 per cent of employers while 67 per cent said they are aiming to address ongoing skills shortages.
In advance of the transposition of the EU Pay Transparency directive, meanwhile, the survey found that barely a quarter, 28 per cent, of employers currently publish internal pay scales and just 4 per cent of small firms doing so.
The Department of Equality has said work on the legislation required to implement the remaining aspects of the directive is continuing but that the process will not be complete by the June 7th EU deadline.
It said the regulations would be brought in on a phased basis and that companies would not be penalised for failing to meet the original schedule.
