Private sector workers in Ireland are set to receive average pay rises of 2.3% in 2021, this compares to an average pay rise level of 2.1% recorded in 2020.
Furthermore, in 2021 only 11% of private sector companies in Ireland are expecting to freeze pay, compared to 23% of businesses who introduced such measures in 2020, most likely because of the initial impacts of the COVID-19 pandemic.
This is according to a Salary Budget Planning Report compiled by Willis Towers Watson’s Data Services Practice. The survey was conducted online in October/November 2020, receiving over 18,000 sets of responses covering over 130 countries worldwide. The Irish research consisted of responses from 258 companies.
In 2021, the highest average pay rises in Ireland are expected in the High-Tech sector (2.8%), Pharmaceutical Health Services (2.6%) and Consumer Products (2.5%) while the lowest level of average pay increases are expected in Financial Services (1.7%), Banking (1.7%) and Insurance (1.6%).
These figures contrast with 2020, where the best average pay increases in Ireland were noted in Banking (2.6%), Financial Services (2.5%) and Insurance (2.5%). Pharmaceutical Health Services also performed well in 2020 with an increase of 2.6%.
In terms of broader salary increases for 2021, a similar picture to that in Ireland is emerging across Western Europe, with most organisations in the major economies anticipating higher pay rises in 2021 than this year. The largest increases are expected in The Netherlands (2.5%), the UK (2.4%) and Germany (2.4%), followed by Italy (2.1%), France and Spain (2%).
Commenting on the survey, Country Lead for Talent & Reward for Willis Towers Watson Ireland, Sarah McDonough said, "As we look forward to 2021, business must also prepare for Brexit and the formal end of the UK transition period. While fewer businesses are planning pay freezes overall, this will undoubtedly impact all aspects of the Irish economy. The true impacts of Brexit are yet to be seen and dependent on the nature of any deal, however the low salary increases expected next year in the financial services, banking and insurance sectors are potential indicators of businesses preparing for the unknown."
She added, "Salary is a core component of staff rewards however as we look forward to 2021, it is crucial that employers find the right balance of rewards for staff. While we do see differences across sectors, there is a universal need for this balance to take account of the new ways of working created by COVID-19, offering support and flexibility while also ensuring staff are empowered to contribute in a productive manner to the success of their business."