Belfast Telegraph

Pay rises in sight as worst over for South

By Anne-Marie Walsh

The worst may soon be over for workers in the Republic, as one in five employers plans to give pay rises next year.

The Irish Business and Employers' Confederation (IBEC) has revealed that 22% of bosses will boost their employees' wages in 2011 - but the majority still intend to freeze pay.

The coming months will however remain tough, as 15% of firms plan to cut salaries this year, with the overall pay bill forecast to drop 3% by the end of 2010.

Almost three-quarters of bosses intend to impose pay pauses this year, but this is predicted to drop to 65% by next year.

Overall, pay is expected to rise during 2011 by a modest 0.3%, the first increase to occur in the last two years.

The pay predictions are made in a new IBEC document that aims to attract investors, entitled 'Ireland as a place to do business'.

It says labour costs have plummeted in the last two years, and that other factors, including the flexibility of the workforce and high education levels, make the country attractive for business.

This renewed optimism among employers is predicted despite a warning by the International Monetary Fund last week that wages needed to fall further if Ireland wanted to improve its competitiveness.

But IBEC said next year's pay rises would be much lower than in other countries, and that labour costs would continue to decline as workers do more for less - meaning that employers' labour costs would not be affected by the modest rise in wages.

The planned pay increases will buck the trend of the last two years, when the majority of employers chose to freeze wages and defer payment of the country's national pay deal.

However, it is unlikely that public sector workers will benefit from increases as their pay, although safe from cuts, has been frozen until 2014.

IBEC said exporting and foreign direct investment firms were the ones most likely to award the increases, while struggling sectors like retail would freeze pay.

Brendan Butler, IBEC's director of international affairs, said: "It will be the first time in the last few years that employers are contemplating pay increases."