Around 85% of businesses have increased pay this year and a further 80% plan to do so next year, Ibec has found.

The employers group's annual HR Update - Pay and Resourcing Forecasts shows that pay increased by an average of 3.6% across all sectors.

More than 400 senior HR professionals were questioned for the survey, which found that pay is projected to rise by 3.1% in 2026 and that there are now expectations of any wage decreases next year.

Over a third of companies plan to increase their headcount in 2026, down from 41% this year and 45% in 2024.

“We are seeing a slight slowdown in headcount growth, however, the overall number of companies maintaining their workforce remains strong," said Maeve McElwee, executive director of employer relations at Ibec.

"Whilst employment trends remain positive, employers are increasingly prioritising investment in the labour market to prepare workers with the skills needed for a rapidly evolving employment landscape."

While most new hires will continue to be for permanent roles, the share is expected to fall from 95% in 2025 to a forecasted 89% in 2026.

Increased production and demand, business expansion and building a future pipeline of talent are the main drivers of employment.

The sectors that recorded the largest pay increases for this year, averaging 5.2%, were hotels, tourism and leisure, reflecting changes in the minimum wage and ongoing demand for labour within these sectors.

"In terms of wage growth, despite easing inflation, wages are expected to continue rising, in line with recent trends. This will be largely driven by minimum wage increases and ongoing competition for talent in particular sectors," said McElwee.

Looking ahead, one of the major challenges for employers will be compliance with the new EU pay transparency rules, which must be transposed into Irish law by June 2026.

"The lack of detailed guidance is a serious concern for businesses, and Ibec has been urging government to publish clear employer guidance well ahead of the deadline to support preparation, ensure compliance, and avoid adding unnecessary regulatory or cost burdens beyond EU requirements.”

(Pic: Getty Images)