Seven out of 10 firms plan to freeze or cut pay rates this year, it emerged today.
A survey revealed less than a quarter of companies expect to increase wages during 2012 despite 58% of those planning on improving productivity.
Business group Ibec said while its quarterly survey suggested some companies will hire over the coming months, it showed pay expectations need to reflect current economic realities and pay rises in 2012 are unrealistic.
Brendan McGinty, Ibec director, said job protection and creation remains the priority for most businesses.
“This means pay restraint nationally and an unwavering focus by Government on restoring competitiveness,” he said.
“Companies are focused on getting costs back in line with our trading partners. This is vital if we are to restore our economic fortunes.”
More than 400 bosses were quizzed by business group Ibec. More than two-thirds (69%) intend to apply a pay freeze for 2012, while about 5% expect to reduce basic pay.
Almost a quarter (23%) of companies expect to increase basic pay rates, with 58% of those expecting improved productivity, 72% plan to improve processes, just under half (48%) will increase workforce flexibility, and 65% expect new product or service development.
Two out of five companies (41%) expect their total pay bill to stay the same this year, with one in three (30%) expecting their total pay bill to increase.
Elsewhere a quarter of companies expect their total pay bill to decrease.
Ibec said Budget 2012 decisions to reduce the redundancy rebate and abolish employers’ PRSI relief on pensions will add to inflation this year, increasing labour costs and damaging competitiveness.
It called on Government to take a range of practical steps to restore confidence in the domestic economy and set out a well-defined jobs strategy.
“Many companies operating in the domestic economy are still struggling to survive,” added Mr McGinty.
“Alongside the current plan for austerity, we need a clear strategy to grow the economy and to sustain jobs.
“Ireland has lost 300,000 jobs over the last four years and we have a shockingly high unemployment rate. This is where our efforts must focus.”