There will be industrial relations trouble ahead if more employers don’t increase pay

Some workers are in line for cuts of up to a tenth in their real pay. This is unsustainable in a tight labour market

Data in the latest Economic Pulse survey from Bank of Ireland suggests there may a stormy period ahead for Irish industrial relations. Trade union officials and human resources managers had better buckle up. They will be busy.

The latest survey from the bank suggests that only about 44 per cent of workers are anticipating pay rises over the next year, with the average rise expected to be about 3.5 per cent. Yet inflation is running at 9.6 per cent, and could rise further if there are more energy shocks.

Parsing the survey’s findings further, the numbers suggest that more than half of all workers — the ones who expect no pay rise at all — are in line for cuts to their real pay of almost 10 per cent over the next year. And the ones who do expect rises will still experience cuts in real pay of more than 5 per cent.

This is clearly unsustainable in such a tight labour market, especially as the economy continues to grow and companies make profits. Businesses in almost every sector of the economy are screaming for staff. Workers have more leverage than they have had in decades.


Interest rates are on an upwards curve and mortgage payments will rise sharply. Inflation looks like it is here to stay for a long while yet.

Hard-pressed private sector workers will look at the current wrangling over a public sector pay deal, where unions are threatening industrial action over a 5 per cent rise spread over two years, and wonder why they are not getting the same or even more.

If business leaders think cuts in real pay of up to a tenth of wages for more than half of all workers is a sustainable scenario for the economy, they ought to think again. Inevitably, this is going to lead to industrial relations strife.