60% of firms set to give pay raises this year

Almost 60% of companies will give their staff pay raises in 2015 and just 1% will cut pay, according to a survey.

The Irish Business and Employers Confederation (Ibec) said the average increase to basic pay predicted by the 462 surveyed companies was 2%.

The employers’ body’s analysis found that the wage increases, combined with changes in employee numbers, would increase companies’ total pay bills by 55% during the course of this year.

“Increases in basic pay and the total pay bill are most likely to occur in hi-tech sectors, such as medical devices (91% increasing basic pay), pharma-chemical (89%), electronic services/telecoms (81%) and electronics manufacturing (87%),” Ibec said.

It found that larger companies are more likely to introduce increases — three out of five surveyed companies with more than 50 employees expected to increase basic pay in 2015 compared with just over half (51%) of respondents with fewer than 50 employees.

Ibec’s survey also found that during 2014, 49% of companies increased basic pay, 50% kept remuneration levels the same, and 1% cut basic pay.

Ibec chief executive Danny McCoy said: “Pay will increase for most in 2015, but not all. The economy is recovering strongly, but we have a long way to go. The economy, in money terms, is still about 6% below its pre-crisis peak and overall price levels are below where they were in summer 2008.

“This needs to be reflected in pay expectations. Many companies remain in survival mode and simply cannot afford pay rises.

“It is vital that pay demands are moderate, so we don’t lose the hard-fought competitive gains of recent years. The focus must be on job creation.

“This year we have the chance to further cut unemployment and attract back migrants that left during the crisis, but we must not repeat past mistakes. If costs spiral and we lose our competitive edge we will pay for it in jobs.”

Mr McCoy also ruled out a national wage agreement for the private sector, saying there was no desire for it in the foreseeable future, adding there should only be discussions on how to contain pay expectations.

“Enterprise level bargaining will remain the norm over the coming years. However, there is merit in establishing open channels of dialogue between government, Ibec and the trade union movement to manage expectations and safeguard competitiveness.”

On Irish tax policy, Mr McCoy said that, despite welcome moves to reduce the income tax burden in the last budget, there was scope to do more.

“Ireland’s high marginal tax rate is still out of line with our competitors and remains a barrier to investment and job creation.

“It is a serious disincentive to work, taking a promotion or doing overtime. Further income tax cuts are needed over the coming years.”