Companies spurn 'across-the-board' pay increases in 2025 

More than half (56%) of employees expect a salary increase this year, says salary guide

Morgan McKinley's Trayc Keevans said employers are shifting from 'reactive salary increases' towards strategic talent retention initiatives.

Irish employers plan to limit average pay rises to just 2% and 3% this year amid rising costs and a tight labour market, new research forecasts.

Despite 44% of companies increasing salaries in the past six months, businesses remain cautious about wage inflation. The Morgan McKinley 2025 Irish Salary Guide published on Thursday said one in four employers plan across-the-board salary increases in 2025 but most businesses plan ‘targeted’ salary hikes for high-demand roles.

More than half (56%) of employees expect a salary increase in 2025 but organisations are becoming “more selective” about salary increases, said Morgan McKinley global FDI director Trayc Keevans. “We are seeing a shift from reactive salary increases towards more strategic talent retention initiatives,” she said.

Demand for flexible working arrangements remains high, with 67% of employees valuing remote work options and 56% prioritising flexible hours. Around 54% of employees believe their packages need improvement, highlighting pensions, health insurance, and bonuses as critical employee offerings.

Employers must take a strategic approach to pay and benefits to retain top talent, said Ms Keevans. "Employers who focus on structured career progression, meaningful benefits, and flexibility will be in the strongest position to compete for talent," Ms Keevans said.

The guide reveals that only 22% of organisations disclose salary ranges, while 60% opt for confidentiality, citing concerns over employee dissatisfaction and complex pay adjustments. "Salary transparency remains a contentious issue for many companies. Employers are wary of the impact open salary structures may have on existing teams, but there is growing pressure from employees and job seekers for greater clarity," Ms Keevans said.

"The Irish job market has settled into a measured pace after the rapid post-pandemic shifts. While economic and regulatory challenges persist, companies that invest in salary transparency, structured career progression, and flexible working policies will be best positioned to attract and retain top talent in 2025," added Ms Keevans.

The report noted Brexit has reinforced Ireland’s status as a financial hub, sustaining demand for skilled talent. Life sciences and engineering remain high-growth sectors, with strong demand for contract roles in validation, automation, and biopharmaceutical manufacturing. Employers are focusing on flexible work arrangements and enhanced benefits to attract and retain talent, as accommodation shortages in Cork, Limerick, and Dublin pose challenges for relocation.

The construction sector continues to grapple with labour shortages, particularly in engineering, project management, and quantity surveying. Demand for specialist skills is rising, particularly in renewable energy and infrastructure, as Ireland accelerates retrofitting, EV charging projects, and upgrades to essential services.

The executive search market in Ireland remained strong in 2024, with high demand for senior roles, particularly in retail and specialised technology positions such as chief technical officers (CTO) and chief information security officer (CISO), amid increasingly sophisticated cyber threats. 

The guide noted talent shortages for sales and marketing roles in Cork. The report also noted attracting multilingual talent to key hubs like Dublin and Cork – remains a challenge, with housing availability and affordability major obstacles