Pay freeze for 2 out of 3 workers

One in three workers can expect a raise this year, two in three can expect a pay freeze, while 4% will endure pay cuts, a survey of employers indicates.

And six out of 10 (56%) of companies are preparing to take on extra permanent or temporary workers within the next six months data from the latest IBEC pay survey reveals.

IBEC today hosts its annual employment law conference at Clontarf Castle, Dublin. The employers body also expects the economy to grow by 1% this year, primarily due to the strong performance of exporting sectors.

IBEC is more optimistic on growth that the Department of Finance, which expects GDP to increase 0.7%.

IBEC director Brendan McGinty: “The survey of 550 IBEC member companies found that 33% will increase base pay in 2012, 63% of companies are due to apply a pay freeze, while 4% expect to reduce basic pay (by about -7% on average). Pay increases are being linked to improvements in productivity or major change.

“Across all respondents, the average expected change to basic pay rates in 2012 is projected at 0.5%, with two thirds (67%) of the companies surveyed experiencing process change improvements, and over half (52%) expect to see new product/service development.”

However, Mr McGinty said pay expectations still need to reflect difficult economic realities for most employers, many of whom are still not in a position to award general pay increases.

“Companies remain focused on regaining competitiveness and getting pay costs back in to line with our trading partners…

“Encouragingly, 2012 labour cost estimates from the European Commission show that Ireland is heading in the right direction, but is still the ninth most expensive country in the EU27, compared to fifth two years ago. Irish labour costs are still 12% above the eurozone average.”

The survey found that for those 457 companies with a sick pay scheme, 37% would reduce the payment level to employees, 23% would reduce the duration of payment to staff, and 18% would change the eligibility criteria, if a statutory sick pay scheme was introduced.

“IBEC has already pointed out that requiring employers to pay an additional €89m to cover the cost of four weeks statutory sick pay would equate to the cost of employing 2,500 jobs by reference to the average industrial wage.”