Third of Irish employers offering pay rises to retain staff

Survey finds half of private sector employers to provide above-inflation pay rises this year

Companies are increasingly offering pay rises to ensure staff don’t leave, with tech firms in particular going all out to retain essential employees with attractive salary increases.

A survey of nearly 600 HR professionals undertaken by the Chartered Institute of Personnel and Development (CIPD), also shows half of all Irish employers intend to provide above-inflation pay rises this year.

According to the study, some 50 per cent of private sector employers said they would be providing increases of 2.7 per cent in 2016, while 37 per cent indicated they were offering pay increases as a counter-offer to employees planning to leave their organisation.

The survey also shows 47 per cent of companies plan to increase their workforce their workforce this year with just 8 per cent planning on reducing employee numbers.

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The research found that pay increases as part of a counter-offer to staff intending to move on was most evident in large organisations with over 250 employees. Last year, 45 per cent of such companies provided salary increases to staff considering leaving.

CIPD’s survey showed this strategy risks becoming the norm in IT and software companies, where more than two-thirds have made a counter-offer to individuals seeking to join another employer.

Over half of financial services and food and drink companies also said they provided pay increases last year to individuals planning to leave.

"Our survey has some welcome positive findings suggesting the economic recovery will continue to contribute to robust employment and wage growth in 2016. However, while increased wages and more jobs is good news for individuals, there is a chance that this trend could erode many businesses' hard-won labour cost competitiveness," said CIPD Ireland director, Mary Connaughton.

“The increased use of counter-offers to keep talent also highlights that many Irish employers are struggling to keep key people at current pay levels as employment opportunities in the labour market increase, raising questions about organisations’ future talent pipelines,” she added.

Charlie Taylor

Charlie Taylor

Charlie Taylor is a former Irish Times business journalist