IBEC has published the results of its latest pay survey, which found that about four out of ten (39%) employers expect to increase basic pay in 2013 and nearly six out of ten (58%) will freeze pay rates.
A further 3% of employers say they plan to reduce pay in the coming year.
IBEC said pay levels in Ireland are 16% above the eurozone average and pay expectations needed to reflect the very significant economic challenges the county still faced.
Across all respondents the average expected change to basic pay rates in 2013 is projected at +0.62%, with pay increases being linked to improvements in productivity or major change. The results are based on a survey of 370 member companies.
IBEC director Brendan McGinty said: “Pay expectations need to reflect economic realities. Most employers are still not in a position to award general pay increases and remain focused on regaining competitiveness and getting pay costs back in to line with our competitors. The ability of employers to sustain and create jobs must not be undermined in the pursuit of unrealistic pay claims.
“Encouragingly, 2012 labour cost estimates from Eurostat show that Ireland is heading in the right direction. Ireland is the ninth most expensive country in the EU 27, compared to fifth two years ago, but Irish labour costs are still 16% above the eurozone average.
Meanwhile the Irish Small and Medium Enterprises Association (ISME) has called for a minimum of one year pay freeze across the economy to ensure a faster return to national competitiveness.
The Association is concerned that any gains achieved in terms of cost in the last four years will be quickly eroded by wage inflation.
According to ISME chief executive Mark Fielding, “while there has been a slight improvement in our competitiveness, there is still a long way to go to regain the levels of 2001. Ireland is still a high-cost location, as many existing SMEs find it extremely difficult to profit from cost reductions because of legacy leases, long term agreements and old wage rates”.
“We must have a national campaign to drive down the costs for everyone. While business sees cost reduction as part and parcel of management, Government and their public servants have proven to be squeamish, not to say, lily-livered when it comes to cost curtailment. Business must continue to take the lead and impose a one year pay freeze as a start.”