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IBEC survey finds 39% of firms cannot afford pay rises

Nearly four in 10 (39%) Irish companies will not be able to award a pay increase this year, according to a survey from IBEC.

The survey says the figure is similar to a previous study at the end of last year, despite recent positive economic news.

The business group is highlighting the situation as it responds to the new deal on public sector pay.

Chief Economist Fergal O’Brien says the pay awards included in it put the public sector at odds with their private sector counterparts, and they should come with further conditions.

He said: “I think it is time now that we put to bed any notion of restoration and ultimately what we will have to have seen in the public sector is a permanent adjustment of the competitiveness in pay levels.

“If we are now moving to a phase from next year or the year after where we are going to have some normalisation in terms of the public sector pay movement, that is compensated for by productivity.”

Ibec CEO Danny McCoy said: “Public sector workers have made a central contribution to Ireland’s recovery through pay reductions, productivity and an ongoing commitment to the delivery of public services. As economic circumstances improve it is appropriate that pay rates are revised.

“However, the across-the-board pay awards in the new agreement puts the public sector at odds with the reality of the private sector, where four out of ten companies cannot afford to increase pay this year.

“This increases the risk of pay rates at particular grades of the public sector drifting significantly from the equivalent rate of pay in the private sector.

Mr McCoy said it could also create “unrealistic wage expectations” in the private sector.

He said: “The new pay agreement also allows very little flexibility to adjust pay rates in particular areas of the pubic sector where skills shortages are leading to severe recruitment and retention problems.

“The approach should have been more responsive to wider labour market trends.”

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