Workers hit by 13pc pay cut -- but the worst may be over
Two-thirds of businesses have hit employees with pay cuts averaging 13pc, a company survey revealed yesterday.
The report also warned that a quarter of firms operating in Ireland intend to impose further cuts in wages this year.
The KBC Bank/Chartered Accountants Ireland spring business study found most companies brought down salaries by between 6pc and 10pc, but a series of massive pay reductions in some firms pushed the average pay cut up dramatically.
Tom Fitzpatrick, Chartered Accountants Ireland president, said management in most businesses was still cutting costs but the major job and pay cuts may be coming to an end.
"Roughly two-thirds of companies have reduced pay and job cuts have been widespread. But the survey suggests four out of five firms have turned their attention to stabilising activity and beginning to prepare for an upturn," he said.
Austin Hughes, from KBC Bank, said: "The most common cut was between 6pc and 10pc but because many companies implemented much larger reductions the average drop in pay was 13pc.
"While a significant number of companies plan to cut pay further in 2010, our survey shows that three out of four firms operating in Ireland don't plan to cut pay again.
"This suggests many businesses feel that their wage costs may be approaching a sustainable level."
Mr Hughes said that improving conditions abroad are supporting manufacturing companies here and helping those in the business to business area.
"In contrast, businesses focused on construction and consumers continue to report weakening activity -- although there are tentative signs that some building firms expect to see greater stability in activity in the coming months.
"Very slowly, and probably unevenly, we should see more stable conditions emerge across the economy, but the experience of different companies is likely to vary enormously," Mr Hughes added.
The majority of firms surveyed said they no longer see cost cutting as their primary concern. One in four are now focused on upturn, while one in five firms said they faced tighter credit conditions. Most believe NAMA will help, but only a little.
Meanwhile, a separate survey from the Small Firms Association (SFA) found that a quarter of businesses expect to make further job cuts in the next three months.
Avine McNally, SFA assistant director, warned business leaders not to become complacent.
"The Government must wake from its slumber and prioritise the restoration of cost competitiveness to the small business sector, which is the only way to retain employment," she claimed. (PA)