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Inflation, the rising cost of living, and what it means for employers

Following the pandemic, and with war in Ukraine increasing the pressure, the cost of daily living is skyrocketing in Ireland. Ever increasing oil prices are forcing up the cost of everything from filling the car to doing the weekly shop. House prices are also at unprecedented levels. With this steep rise in living costs, employees are looking to their employers for pay rises, or are leaving jobs and moving to cheaper areas in order to cope. This is having a significant impact on employers, who are often unable to implement the pay rises that are needed at a time when business is still struggling. At CareerWise we look after both employees and employers through the good times and the bad. Here’s our take on the cost of living crisis, and what it means for employers.

The last two years have perhaps only marked the start of a tumultuous time in Ireland. The world of work has changed a huge amount in a very short period. Employees adapted quickly to working from home, and this prompted an attitude of reassessment, leading to what has been dubbed “The Great Resignation”: workers who, with space and time to reflect, have decided to leave their current position in search of a better life. This pervasive sense that life is too short to do a job you do not like has meant increasing pressure on employers to provide not only employment but an attractive company culture and employee benefits.

And this pressure is only set to increase as inflation and the cost of living crisis hit. Labour shortages in many sectors compound employers’ problems. Additionally, the Irish Congress of Trade Unions has advised members to seek pay increases of up to 5.5%, in order to keep pace with rising prices (Irish Times). The ICTU General Secretary Patricia King points out the real terms impact of the economic situation, “Inflation devalues the value of somebody’s wage in their pocket”. Workers will see their standard of living decrease significantly unless their pay increases in line with inflation.

The Tánaiste, Leo Varadkar advised last month, “Where employers can afford pay rises, they should do them.” (Irish Times) However, for many employers, pay increases present an impossible challenge. The economic impact of the pandemic is still being felt, with public caution around spending and many sectors such as hospitality still trading below pre-covid levels. Employers will hope that the new government measures designed to ease the cost of living crisis will also ease the pressure to increase pay. The government’s package of short term measures is designed to assist fixed or low income households who have been the hardest hit by the recent price rises. The measures include a €200 enhanced energy credit, an extra €125 going to those in receipt of fuel allowance, and a 20% reduction in public transport fares for many services. However, many are forecasting that these schemes will not be enough to support those struggling the most. And this in turn means the calls on employers to increase pay will likely continue.

The Irish Government has made a commitment to move from a minimum wage policy to a higher “living wage”, designed to take into account the proper cost of living. While the minimum wage is a statutory binding amount that all employers must pay, a living wage is defined as an amount that makes possible a minimum acceptable standard of living. The Living Wage Technical Group currently calculates this to be €12.90 an hour in Ireland. The Low Pay Commission is examining how Ireland can move towards a living wage.

The living wage might sound like an additional challenge for employers, but there are widely accepted benefits to adopting the policy. Better wages mean more money for employees to spend in their community, stimulating the economy, making it easier for businesses to thrive. Better wages also mean greater employee satisfaction, improved job retention, and staff who are more dedicated to being part of the team. Employers can also expect increased productivity, boosted morale, and easier recruitment, in exchange for their increased outlay. There are many who consider a living wage to be not only a social benefit, but also actively good for business.

Are you an employer looking to recruit in Ireland?

CareerWise is Ireland’s leading specialist recruitment firm, based in Cork, Shannon and Galway, and we can help you to find your ideal new employees. We specialize in the Engineering, Supply Chain, Science/Pharma, IT and Accounting industries in Ireland, and we look forward to working with you. Contact us online now or call us on +353 (0) 21 206 1900 to arrange a consultation.


Cork Office

CareerWise Recruitment. EastGate Village, EastGate, Little Island, Cork.

Phone: +353 (0) 21 206 1900