New research shows downward trend in pay increases in Irish companies

More than half of Irish employers plan to increase pay this year however, the average increase is expected to be 2.9%, down from a high of 5% in 2022 according to the CIPD and Industrial Relations News (IRN).

The figures are contained in the CIPD/IRN Pay and Employment Practices Survey 2026, which looks at pay and employment trends in the private sector and commercial semi-state organisations. 

Overall, the survey shows a more cautious approach to pay increases, boosting overall employee numbers and highlights that housing shortages are constraining recruitment and retention:

• 78% increased salaries in 2025, while 59% are planning a pay rise this year
• The average increase is projected to be 2.9%, down from 3.3% in 2025 and 4.2% in 2024
• 44% intend to increase employee numbers this year, while 14% are planning to decrease
• 61% of employers report the housing crisis is impacting recruitment and is driving demand for hybrid and remote work among 73% of employers

Alison Hodgson, the CIPD’s Country Director Ireland said:

“A clear downward trend in pay growth is emerging in the private and semi-state sector. While many employers still plan to raise pay, the pace of increases is slowing as organisations take a more cautious approach in the face of ongoing economic uncertainty.

“The housing crisis is also continuing to shape the labour market in a very real way. Employers are telling us that difficulties securing affordable accommodation are making it harder to attract and retain staff. As a result, flexible and hybrid working are becoming even more important tools for employers trying to access and keep talent.”

AI integration is a priority for 73% of employers with addressing skills shortages is an urgent focus area for 67% of those surveyed. 

The survey assessed preparedness for the EU Pay Transparency Directive which is due to be transposed into Irish law by 7 June. It found that only 28% of organisations are currently publishing internal pay scales. The figure drops to 4% in small firms and is 16% in the manufacturing sector.

Two-thirds of respondents want new employees to join existing pension schemes rather than the statutory auto-enrolment route, with adoption highest among smaller firms (77%).

Meg Dunphy, the CIPD’s HR Policy and Engagement Manager said:

“Employers are clearly preparing for a workplace that is changing rapidly. The strong focus on AI adoption also underlines the growing importance of investing in people’s skills. Addressing skills shortages and supporting employees to adapt to new technologies is critical if organisations are to realise the full benefits of AI. Currently, the appetite for AI adoption is disconnected from the integration on the ground and organisations will need to start designing work in new ways to get the best from both humans and tech.

“At the same time, significant regulatory changes are on the horizon. With the EU Pay Transparency Directive due to come into effect this year, many organisations still have work to do to ensure they are ready, particularly when it comes to developing clear pay structures and improving transparency around pay decisions.”

Read the report