• Pressure on employers as demand for increasing salaries set to continue in 2022

    Michelle McDonagh, Senior HR Client Relationship Consultant, Adare Human Resource Management


    The latest Earnings and Labour Costs report from the Central Statistics Offices, published 31st May, shows that average weekly earnings now stood at €880.37 in the first quarter of the year, an annual increase of 2.3% and hourly earnings increased on an annual basis by 1.9% to €27.33.


    However, increasing inflation is negatively impacting any wage increases with the ESRI recently reporting stating the effect on workers’ pockets equated to an average decline of €1,300.


    The pressure on employers to increase salaries in 2022 is clearly evident in our HR Barometer Report 6.1. The report, published last month, found that ‘Higher salary with new employer’ was the main reason employees left for a new job. And with ‘retention’ highlighted as the top HR priority for 2022, it is not surprising that over half (54%) of organisations have already or will be increasing salaries this year.


    Our HR Barometer Report 5.2, published in November 2021, found that nearly three quarters of businesses increased salaries last year.


    The two reports highlight a significant difference in what employers the increase employers were planning to were planning to pay. In November 2021, we reported that the average salary increase for 2022 was 3.7%. However, in our most recent report, the average salary increase is now 5.3%. For smaller businesses this increases further to 6.6%.


    The impact of inflation on the cost of living is going to continue to put pressure on employers as the demand for salary increases continues. The skills shortage is also having a considerable influence on the employment landscape with further pressure on employers to increase salaries and bonuses. This creates some serious challenges for employers in terms of their business strategies, HR and People Management plans and the impact on finances.


    In terms of the private sector, our HR Barometer Report 6.1 found that 77% of organisations in the Construction & Manufacturing have or will increase salaries in 2022, followed by Finance and Professional Services at 61%.


    The Government is also under increasing pressure from various trade unions to reassess the current pay deal. And while this was publicly acknowledged recently by the Minister for Public Expenditure, Michael McGrath, he also said that it needs to be done in a balanced way.


    Under the current pay deal, public sector workers received a 1% increase in salary last year with a further 1% increase this coming October.


    With no sight of inflation stabilising any time, there are some careful considerations for Government to ensure any potential threat of industrial action does not become a reality as well as implementing measures to help workers deal with the increasing cost of living.


    While employers can expect demands for salary increases to continue, they also need to consider a more holistic approach to retention. A robust retention strategy can often provide the competitive edge to keep the talent you have and improve talent acquisition.



    Adare Human Resource Management is a team of expert-led Employment Law, Industrial Relations and best practice Human Resource Management consultants. For more information go to www.adarehrm.ie or call (01) 561 3594 or email adarechambers@adarehrm.ie.