Irish pay rises high but of little use, says survey

IRISH employees will receive one of the largest pay increases in the EU this year but in net terms will be among the worst off because of the rate of inflation.

The latest figures come from a survey conducted by Mercer International, the human resources consultants who looked at pay and inflation trends in 60 countries worldwide.

On average, workers from operations staff to senior executives at multinational companies in Ireland will get a 4.4% increase in their wages.

This is the third highest after Greece and Italy. But by the time inflation of 3.2% is taken into account they will be left 1.2% better off the third lowest increase in the EU in real terms.

Just less well off than the Irish workers will be the Austrians and the British, according to the forecast released in London yesterday.

Mark Sullivan of Mercer said: "Most organisations are reluctant to commit to high pay increases. Though there is some optimism that the economy will pick up, employers want to keep the lid on fixed costs including base pay."

However, he was more optimistic for the future. "The past few years have been tough on businesses globally. The outlook for 2004 is much better, but it takes time for corporate recovery to be reflected in pay increases."

In the 15 EU member states, average pay increases in 2004 are expected to be highest in Greece at 5%. However, inflation here is likely to be relatively high too at 3.5%.

Employees in Italy and Portugal are expected to get pay rises of 4.5% and 4.4% respectively, while inflation is forecast to be 1.9% and 2.2%. In Britain, workers will see their wages rise by 3.6% and inflation is likely to be 2.5%.

Belgian workers are due to benefit from the best pay increases in the EU as they will hang onto 2.8% of their pay increase of 4% because inflation is expected to be just 1.2%.

Finnish workers will get the third highest pay increase in real terms of 2.8% thanks to a rise of 3.4% and an inflation rate of just 1.2%.

Switzerland, which is outside the EU, is expected to have one of the lowest pay increases in Europe at 1.9% and have a very low inflation rate of 0.7%.

In the countries due to become full EU members next May, the best off will be Lithuanian workers due to receive pay increases of 6.1% while inflation will be just 1%. Slovakians will get a 7% pay rise but this will be wiped out by inflation expected to run at the same rate while Estonians will be 1% worse off as their pay increase of 2% will be less than inflation of 3%.

For the third year in a row US and Canadian employees will have salary increases of less than 4% at 3.6% and 3.3% while inflation is anticipated to be 2.3% and 2.1%, respectively.