Over 70% of companies in Ireland expect to increase pay for employees next year, according to the latest research by the employers' group Ibec.

However, the survey also shows that a significant number of companies, particularly smaller ones, still cannot afford to increase pay in 2016.

According to Ibec's September survey of 340 companies, the average pay rise in 2016 will be 2%  - in those companies that can afford pay increases.

Of larger companies, 85%, particularly in the hi-tech sector, anticipate conceding wage increases.

However, among small and medium enterprises employing fewer than 50 employees, only 58% will raise basic pay as many are still struggling.

Ibec claims the combination of pay rises and budget tax cuts should see an average worker's take-home pay rise by over 3% from January - worth about two weeks’ wages over the full year.

Ibec's Head of Industrial Relations and Human Resources Maeve McElwee warned that the increase in the National Minimum Wage to €9.15 would add €80 million to the cost base for business, putting pressure on labour-intensive, low-margin companies. 

She said the focus must remain on job creation and addressing regional inequalities - as if costs spiral, and Ireland loses its competitive edge, it will pay for that in jobs.