Pay rises off the agenda for most private sector employers, consultants warn

For most employers, any notion of pay increases are off the agenda for 2021, a leading private sector employment and industrial relations consultancy has advised clients.

Stratis Consulting also warned, in guidance to clients on Friday, that a significant issue that would arise with the mainstreaming of remote working on foot of the pandemic was "to decide if for certain roles, there should be a movement towards pay for work done rather than for time."

“Covid-19 is requiring many organisations to re-evaluate their resourcing and work organisation models. These may be necessary for the organisation to reopen or continue to operate. Investing in and developing people to maintain maximum relevance and career security (over job security) will be essential for both employers and workers.”

Redundancies

Stratis warned that a surge in redundancies was likely to follow on from the unwinding of various State supports put in place during the pandemic as employers sought to re-size their businesses.

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Brendan McGinty, managing partner at Stratis Consulting and former director of industrial relation at Ibec ,said recovery from the impact of the pandemic “will not be even across all sectors”.

“As a result, for most employers, any notion of pay increases are off the agenda for 2021. This is especially so for those reliant on the Irish domestic economy.”

It said price inflation did not pose a significant threat in the near term “given recent disinflation with the Consumer Prices Index (CPI) rate at (minus) 0.3 per cent for 2020 and (minus) 0.6 per cent in January 2021.

It said companies and organisations that did move to reach agreements on pay “should do so having regard to both their own commercial and economic circumstances but also for the impact of their actions on other employers”.

Stratis said employers should look to ensure they were securing full delivery of commitments under their existing agreements and negotiations should seek to secure cost-offsetting measures and employers should avoid paying separately for change.

Unions

The consultancy said unions “should be challenged on their justification for any claimed pay increases”.

“Some employers may wish to delay discussions on pay until later in 2021 when they have more certainty about trading conditions. For some employers, a position of inability to pay may be a more credible response, especially where Covid-19 or the impact of Brexit has been significant. “

“ Others may be willing to agree a short pay deal or a lump sum payment in lieu for 12 months in view of ongoing uncertainty.

For some, who entered multi-year pay agreements prior to Covid-19, these may need to be revisited.

“Where in the case of a minority of employers, such as a multinational operation which has not been hugely impacted by Covid-19, some seem likely to conclude deals in the range of circa 2.-2.5 per cent per annum, where this is justified on productivity grounds, but with a trend to the lower end of this range. “