Four in five firms plan pay increases next year with average of 3.8%

October 26, 2023

Around four in five businesses are planning on increasing pay for employees in 2024, with an average pay rise of 3.8%.

This is according to the latest Pay and HR Update, an annual survey of around 400 firms conducted by business group, Ibec.

The figure is in line with the 84% of companies that increased basic pay rates this year.

The average increase of 4.4% in 2023 was slightly higher than the 3.8% rise forecast this time last year, reflecting the ongoing pressure on consumer prices in the current inflationary environment.

“Today’s pay report reveals that most pay increases are in line with inflation,” Maeve McElwee, Ibec’s Executive Director of Employer Relations, said.

“However, some sectors, like hospitality and retail, stand out with notably higher-than-average pay increases, which can be attributed to labour shortages within these industries.

“These sectors are currently grappling with challenges related to recruitment and retention, as well as adjustments in the national minimum wage,” she explained.

The figures point to average pay increases of 5.9% and 5.3% in the hospitality and retail sectors respectively in 2023 with further increases of around 6% and 5% expected this year.

However, in other sectors, wage expectations look like they might be more tempered in line with the rising cost of business in the years ahead.

“New and impending legislative changes, such as statutory sick pay, pension auto-enrollment, and enhanced protective leave entitlements, are posing significant additional cost challenges for businesses in the short to medium term,” Ms McElwee said.

Elsewhere, the report indicates that businesses here had an average staff turnover of just under 10% – or one in ten employees – in 2023.

“In a tight labour market, we’ve seen considerable turnover of staff where people have had opportunities maybe to move that weren’t available previously and, with lots of competition for skills and talent, people have had an opportunity to move from one sector to another,” Maeve McElwee told Morning Ireland.

“What we’re seeing here is a bit of a slowdown. People are choosing to stay within their industry and sector for a longer period of time. That’s good news for HR departments that are struggling to recruit and retain.”

She said hybrid working remained in the top 5 considerations for employees in 2024, but it wasn’t a huge factor determining decisions to stay in or leave a company.

Despite the well-documented retrenchment in the IT sector of late, Maeve McElwee said pay pressures in the sector were similar to other industries.

“What we saw in IT was a right-sizing and scaling back to meet demands of the organisations rather than any single crisis with in the sector itself,” she concluded.

45% of businesses say they plan to increase their headcount in 2024.

59% of respondents believe artificial intelligence has the potential to enhance productivity and work conditions, but only 29% agree that their organisation has the skills to adopt AI.

Article Source: Four in five firms plan pay increases next year with average of 3.8% – Brian Finn – RTE

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