Workers in Ireland in line for biggest pay hike in a decade, Central Bank says

The Central Bank forecast that 'compensation per employee' would increase annually by an average of 2.9 per cent in real terms between 2024 and 2026. Photograph: Alan Betson

The positive outlook for wages comes on the back of a rapid fall-off in headline inflation, which is expected to average just 2 per cent this year, down from more than 5 per cent last year, and an ongoing tightness in the labour market, which underpins salary growth. It cautioned, however, that the lift in salaries would be uneven due to recent changes to the minimum wage and because of incremental and backdated increases to public-sector pay arising from the new deal, which it said would result in large annual increases in the second and third quarters of 2024.The projected lift in real incomes would underpin consumer spending, which would in turn drive modest but stable growth in the domestic economy, the financial regulator said.

It also warned that domestic factors had now become the main drivers of inflation. While headline price growth fell to 4 per cent in January and is expected to average just 2 per cent this year, inflation in the services sector remains above 5 per cent and is projected to decline only gradually out to 2026.

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