Pay for Irish workers to 'outpace inflation'

Pay growth for Irish workers is expected to outpace inflation over the next three years, according to the Republic's Central Bank.

It said it expected a measure known as "compensation per employee" to increase by an average of 2.9% a year in real terms between 2024 and 2026.

Inflation spikes over the past two years mean that many workers have seen the real value of their pay fall.

The Central Bank said that in 2023 average compensation per employee in Ireland had fallen by 0.7% in real terms.

Real pay is the value of pay adjusted for inflation and is a guide to how living standards are changing.

Pay can increase in cash terms but if it is not keeping up with the rise in prices, then it is falling in real terms.

The Central Bank said it expected rising real pay to be underpinned by falling inflation and continuing low unemployment.

Ireland’s Finance Minister Michael McGrath said: "What will be most welcomed by many is the forecast of real income growth - adjusted for inflation - of almost 3% p/a for the next 3 years.

"This means that, after a period of high inflation, workers can now expect to see their living standards improve."

Overall the Central Bank is expecting the Irish domestic economy to grow at a moderate pace of about 2% a year in each of the next three years.

The Irish economy grew strongly in the aftermath of the pandemic but the pace of growth showed sharply last year as inflation and higher interest rates hit households and businesses.