Wages As 5% To This Continues Year Rage Inflation Surge 10% To Expected

Wages expected to surge 5%-10% this year as inflation continues to rage — 10% Top Salaries And Indicated High Wage By Rising Survey In Estimates, Some 20% Could 5% A Previous As Cases, Inflation As With Has

Wed, 12 Jan, 2022 - 08:48

Geoff Percival

Irish salaries could surge by as much as 5%-10% — and even higher in some cases — this year as inflation rages on, according to a new report.

Inflation hit 5.3% in November and, while EU forecasts have suggested Irish wage inflation could climb as high as 5%, the latest Irish salary guide from recruiter Morgan McKinley suggests that rise may prove much higher.

It said salary increases are likely to be in the region of 5%-10% this year. But, it said increases could be as high as 15%-20% in certain niche skills sectors.

The upward pressure on salaries, it said, is being driven by fewer international workers coming into the country and a high demand for people already here. Morgan McKinley said it expects normal wage inflationary figures — of 2%-5% — to return after the disruption caused by the pandemic passes and as more international workers re-enter the market, easing pressure on what it calls “an overheated employment market”.

“We’re currently seeing the most demanding employment markets of our time,” said Morgan McKinley Ireland’s Trayc Keevans.

The Covid disruption has prompted workers to re-evaluate their options, she said: "They’re looking for opportunities that give them the right pay, benefits, and work arrangements in the longer term.

New opportunities opened up by remote work means workers can now access roles that previously were geographically off-limits.

"As a result, there is a constant misalignment between the supply and demand for employees in the market. We’re experiencing the return of counter-offers because there is a strong demand to fill roles."

Elsewhere, new Bundesbank president Joachim Nagel has warned eurozone inflation may remain elevated for longer than currently expected.

Inflation in the euro area reached a record 5% in December and is running at an even faster pace in Germany. While Mr Nagel acknowledged that temporary factors are partly to blame for current pressures, he also called the medium-term outlook “exceptionally uncertain".

ECB chief economist Philip Lane reiterated, last week, the view that the current high inflation level is temporary and prices will fall later this year.