DUBLIN, August 12, 2022 – Companies in Ireland have pushed expected pay rise budgets to 3.4% to tackle the challenges of a tighter labour market, inflation and employee expectations according to WTW’s latest Salary Budget Planning Report.
Despite the planned salary budget increase however, not all employees will benefit directly from an increase in take home pay due to rising inflation. Instead, some employers in Ireland might target high retention risk, hot skills or lower paid roles for salary increases when distributing their pay rise budgets.
This survey found that inflation is forcing companies in Ireland to make changes to their salary budgets. Close to two-thirds (61%) of companies have budgeted for higher employee pay rises than in 2021, while 39% of organisations have increased their budgets since original projections were made earlier in 2022. Less than half (46%) have opted to stick with the pay budgets they agreed at the start of 2022.
Total compensation budgets, covering pay, benefits, discretionary bonuses and payments, have increased even further, by 6%, suggesting that companies in Ireland are navigating cost increases to benefits, investing more in discretionary pay, or even making one-off payments and signing-on bonuses.
Several factors are influencing the change in salary budgets for 2022 in Ireland. Two-thirds of those surveyed identified concerns over a tighter labour market (66%) and more than half (57%) said that an increase in salary budgets has been influenced by concerns in relation to inflation and rising cost of supplies. Other factors influencing the increase in salary budgets include employee expectations or concerns (43%) and anticipated stronger financial results (26%).
“Labour market conditions and inflationary expectations are causing companies to make changes to their reward programmes, with one of the prime motives including increasing salary budgets.”
April McDonnell | Director of Rewards Data Intelligence at WTW Ireland
Commenting on the research, April McDonnell, Director of Rewards Data Intelligence at WTW Ireland said, “This year has seen growing financial pressures across the board, and salary increases are being outpaced by inflation rates. Labour market conditions and inflationary expectations are causing companies to make changes to their reward programmes, with one of the prime motives including increasing salary budgets.
“Pay budget increases are also being driven by pressures to improve attraction and retention, particularly when there is pressure for employers in Ireland to find ways to better meet their workers’ needs. Returning to pre-pandemic levels of employment has been difficult for companies in Ireland and pay has always been an important factor for employees, especially now with the rising cost of living. Employers must also look at the strength of their overall packages in relation to the needs of their staff and this means putting an increased focus on non-monetary rewards such as health and retirement benefits, providing flexibility and focusing on staff wellbeing.”
“Companies will need to evaluate their business priorities to identify where longer-term funding will come from because it’s likely that issues surrounding recruitment and inflation will extend well into 2023 and possibly beyond.”
April McDonnell | Director of Rewards Data Intelligence at WTW Ireland
Concluding, April McDonnell said, “To ensure the attraction and retention of staff, companies in Ireland need to define their priorities and the strategic approach they’d like to take in advance. Companies will need to evaluate their business priorities to identify where longer-term funding will come from because it’s likely that issues surrounding recruitment and inflation will extend well into 2023 and possibly beyond.”
The Salary Budget Planning Report is an authoritative global study about salary budgets and recruitment compiled by WTW’s Reward Data Intelligence practice. The survey was conducted in April and May 2022. Approximately 22,570 sets of responses were received from companies across 168 countries worldwide. In Ireland, 413 organizations responded
