70% of firms to cut or freeze pay

ALMOST 70% of companies are set to reduce or at least freeze staff pay rates next year, according to research from employers’ representative, IBEC.

“Despite the fact that a quarter of companies plan to hire new staff in the next three months, employers are still not in a position to award pay increases. Companies remain focused on regaining competitiveness and getting pay costs back into line with our trading partners,” commented IBEC director, Brendan McGinty on the back of the publication of his organisation’s latest pay survey.

Of the 400+ companies surveyed in the latest edition of the survey, 69% said their pay rates would either remain unchanged, or would be lowered in 2012. IBEC added, even though many companies aim to take on more staff in the upcoming months, pay expectations still need to reflect “current economic realities”.

“Job protection and creation must be the priority. Irish annual nominal compensation costs per employee remain 15% higher than the EU 15 in 2011, despite improvements in recent years. The minority of companies that will award pay rises will do so on an exceptional basis, typically on foot of significant productivity increases or increased workforce flexibility,” Mr McGinty added.

IBEC is looking for the Government to restore confidence in the domestic economy through a range of what it calls “practical steps”, in order to protect and create jobs.

Said Mr McGinty: “Many companies operating in the domestic economy are still struggling to survive. Alongside the current plan for austerity, we need a clear strategy to grow the economy.”

Among the steps IBEC wants government to take (some of which it has already published via its recent pre-budget submission) are a reform of current pension rules, the introduction of stamp duty and property tax incentives for first-time house buyers and a new social welfare smart card system to ensure that payments and benefits spending are promoted in the domestic economy.

Mr McGinty said Ireland’s inflation rate remains the lowest in the eurozone, “ensuring that Ireland’s competitiveness, relative to trading partners, continues to improve”.