‘8 out of 10 businesses expect to award pay increases in 2016’
Employers will face sustained pressure for increases in pay in 2016, as it looks like you may be facing the perfect storm – economic growth forecast 6 – 7%; unemployment is falling creating increased competition for staff; and politicians are making election promises.
The low Pay Commission has recommended that the National Minimum Wage be increased from €8.65 to €9.15 effective the 1st January 2016.
ICTU have been promoting the concept of the Living Wage (€11.50 per hour) and some private sector businesses – IKEA, Lidl and Aldi – have declared support for the concept.
Private sector pay deals
Pay increases in the private sector will be determined by local wage negotiation, with high performing export sectors (pharmaceutical & electronics) agreeing deals of 2 to 5%. At the other end of the spectrum many expect deals below 2.0% and some companies that are still in difficulties trying to maintained pay freezes that have been in place since the economic crisis began in 2008.
Trade Union position
TU leaders have proposed that pay increases should be between 2.5% to 5.0% for 2016. This is to be expected but the evidence suggests that there will only be a small number of deals at the high end.
The Trade Union – SIPTU – recorded 170 wage agreements in the past 18 months with an average annual increase of 2.0%.
However, there was a wide variation in the terms and duration of the agreements;
- Agri-food sector 1.76% per year / (3.59% over 25 months
- Electronics and engineering 2.07% per year / (3.44% over 20 months)
The duration of the agreements varied widely with the longest reported deal of 6.0% over 48 months in the Agri-food sector.
I am an accredited mediator with extensive experience of negotiating pay deals for private sector firms in unionised and non-unionised environments.
Contact me if you are under pressure to do a pay deal in 2016!