Irish Workers Anticipate Pay Growth Surpassing Inflation, Forecasts Republic’s Central Bank
According to the Republic’s Central Bank, Irish workers can anticipate their pay growth to outpace inflation over the coming three years. The Central Bank projects an average annual increase of 2.9% in real terms for a metric known as “compensation per employee” between 2024 and 2026.
In recent years, inflation spikes have eroded the real value of workers’ pay, with average compensation per employee falling by 0.7% in real terms in 2023. Real pay, adjusted for inflation, serves as a crucial indicator of changing living standards. While pay might rise in nominal terms, failing to keep pace with inflation leads to a decline in real terms.
The Central Bank attributes the expected rise in real pay to declining inflation rates and sustained low unemployment levels. Ireland’s Finance Minister, Michael McGrath, welcomed the forecasted real income growth of nearly 3% annually for the next three years, particularly following a period of heightened inflation. This forecast suggests an improvement in living standards for workers.
Overall, the Central Bank anticipates moderate economic growth of about 2% annually for the Irish domestic economy over the next three years. While the economy experienced robust growth in the wake of the pandemic, growth rates slowed notably last year due to factors such as inflation and higher interest rates impacting households and businesses.
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