More than half of Irish employers plan to increase pay this year however, the average increase is expected to be 2.9%, down from a high of 5% in 2022.
That is according to a survey from the professional body for the HR industry CIPD and Industrial Relations News (IRN).
The Employment Practices Survey found that 78% of employers increased salaries in 2025, but 59% are planning a pay rise this year.
The average increase is projected to be 2.9%, down from 3.3% in 2025 and 4.2% in 2024.
The research found that 44% of respondents intend to increase employee numbers this year, while 14% are planning to decrease headcount.
"A clear downward trend in pay growth is emerging in the private and semi-state sector," said Alison Hodgson, CIPD's Country Director for Ireland.
"While many employers still plan to raise pay, the pace of increases is slowing as organisations take a more cautious approach in the face of ongoing economic uncertainty," she said.
"The housing crisis is also continuing to shape the labour market in a very real way. Employers are telling us that difficulties securing affordable accommodation are making it harder to attract and retain staff," Ms Hodgson said.
"As a result, flexible and hybrid working are becoming even more important tools for employers trying to access and keep talent," she added.
135 private sector and commercial semi-state employers completed the survey.
It is being released to coincide with the IRN Annual Conference which takes place in Croke Park today.
