Firms to increase wages by 4% this year, survey finds

Also found 38% of respondents, down from 43% previously, expect house prices to rise by more than 5%

The Central Bank last week sad it expects inflation, on a harmonised measure, to average 4.5% this year, as energy-driven price hikes start to fall back from early summer. 

Around half of firms plan to increase wages by an average 4% this year, a Bank of Ireland survey has found, in a year that inflation is running at its highest level for decades. 

The survey takes the economic pulse of a number of areas, including business and consumers, and is the latest to show that with the lifting of almost all restrictions for the Omicron variant that there has been a bounce in optimism for businesses and households. 

"With the acceleration of the vaccine booster campaign and signs that the Omicron wave of the virus may be less severe and relatively short-lived, the mood this month was one of cautious hope," according to the survey. 

“The business pulse got some of its swagger back in January, with three of the four sectoral pulses rising,” the bank's chief economist Loretta O’Sullivan added.

However, the spike in global consumer prices which for Ireland has brought inflation  to 5.5%, marking the fastest for two decades, means economists are looking out for any sign that general price rises will lead to a potential vicious circle of 1970s-style wage-driven inflation.          

On the face of it, the findings of the Bank of Ireland that just under half of workers anticipate pay increases this year of around 3%, while half of firms plan to award increases of 4%, would not suggest any such wage-driven pressures.

However, the survey finds that 38% of its respondents, down from 43% previously, expect house prices to rise by more than 5%.

The Central Bank last week sad it expects inflation, on a harmonised measure, to average 4.5% this year, as energy-driven price hikes start to fall back from early summer. 

Separately, a survey by Grant Thornton found most firms here are upbeat about the coming year, but are worried about energy prices and hiring staff who have the right skills. 

"From a labour perspective, there is a skills shortage globally in a number of sectors that represents a major challenge for businesses in terms of growth, including here in Ireland, and the lengthy visa-processing times and other red-tape hurdles have only exacerbated this issue," Grant Thornton said.