Half of businesses plan 2021 pay freeze amid economic uncertainty

Survey by employers’ group Ibec finds big disparity in wage expectations

Economic uncertainty arising from Brexit and Covid-19 is seen as the prime challenge for Irish businesses over the next 12 months, prompting half of companies to say they will freeze pay in 2021, according to a survey by employers’ group Ibec.

More than two-thirds of organisations cited it as a major challenge for their operations in Ibec’s latest HR Update.

Nearly a third of businesses also identified remote working as a long-term challenge, while a similar proportion saw “preserving organisational culture” as a top challenge.

Despite the challenges, Ibec’s annual survey found that 28 per cent of organisations were planning to increase their staff count in 2021.

On pay, the situation was more complex. The survey found evidence of a “growing gap” between firms and households doing well and those that faced significant falls in income due to the pandemic.

The survey highlighted what it described as a significant trend towards freezing pay across 2020 (42 per cent of organisations) and into 2021 (49 per cent of organisations).

This holding pattern is also evident in employee staffing levels, Ibec said.

At the same time a similar percentage of employers (49 per cent) indicated they were planning wage increases in 2021.

The disparity demonstrates the sharp divide in the sectoral impact arising from Covid-19 and to some extent the anticipation of Brexit impacts, Ibec said.

Remote working

On remote working, Ibec said this would “continue by necessity” into 2021.

However, while there is a willingness to invest in the area, it said businesses still had concerns regarding collaboration within teams, the impact on innovation and employment rights issues.

It said hybrid working would be the most common arrangement by September 2021. On-site working is and will remain the most common work arrangement, with organisations indicating that, on average, they expect 60 per cent of their workforce to be working fully on-site by September 2021, it said.

“Businesses have managed through extraordinary times in 2020,” said Ibec director of employer relations Maeve McElwee.

“ From the sudden lockdown of the economy in March, resulting in office workers moving to remote working, essential services adapting to meet new and necessary protocols, and for some, to the difficult challenge of having to lay off or reduce the hours of their employees, it has been a testing time,” she said.

“As the economy strives to function against the backdrop of uncertainty caused by Covid-19 and the approaching Brexit outcome, businesses are experiencing both positive and negative impacts on their trading performance across different sectors,” she said.