Business Irish

Saturday 29 April 2017

Two-thirds of employers plan to freeze or cut wages next year

Anne-Marie Walsh Industry Correspondent

PAY freezes will continue next year for the vast majority of the country's 1.8 million workers.

The main private sector employer group IBEC has revealed that more than two-thirds of companies were planning pay pauses or wage cuts in 2012.

A pay freeze already exists across the public sector until 2014, although increments are still being paid.

IBEC's latest survey of more than 400 member companies reveals 64pc will keep pay levels unchanged next year.

About 5pc of them expect to cut wages by about 10pc.

The revelations are slightly better news than its predictions for this year.

Twelve months ago, 72pc of companies said they planned to freeze pay in 2011, while 7pc said they would reduce wages.

But more companies -- 27pc -- expect to increase pay next year, compared with 18pc in 2011, although the average increase will only be around 2pc.

IBEC director Brendan Mr McGinty said employers were still not in a position to give pay increases despite the fact that a quarter of them planned to take on more staff in the next three months.

"Companies remain focused on regaining competitiveness and getting pay costs back in to line with our trading partners," he said.

"The minority of companies that will award pay rises will do so on an exceptional basis, typically on foot of significant productivity increases or increased workforce flexibility."

He said labour costs per employee in the Republic were 15pc higher than in EU countries.

Overall, the survey says basic pay rates would rise slightly next year -- by just half a per cent -- compared with this year. The employers group called on the Government to create jobs and boost the economy alongside its current austerity plan.

It called for reform of pension rules to allow people to draw down up to 25pc of the value of additional voluntary contributions to their pension schemes, without penalties.

It pointed out that the value of the country's pension funds was €70bn.

IBEC also wants a new social welfare smart-card system to promote spending, as well as stamp duty and property tax incentives for first-time buyers.

"Every house sale generates €20,000 in ancillary services," said a spokesman.

"A normalisation of transactions would generate approximately €600m per annum for the domestic economy."

IBEC's 7,000 members employ more than 70pc of the private sector workforce.

Irish Independent

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