Ibec Publishes its HR Update – Pay and Resourcing Forecast Report 2026
- Wages expected to increase on average by 3.1% in 2027
- 35% of companies plan to increase headcount in 2027, down from 37% (2026) and 41% (2025)
Ibec, the group representing Irish businesses, has today published its annual Pay and Resourcing Forecast, focusing on pay data for 2026 and forecasts for next year. The research, part of the annual Talent, Trends and Pay Survey report conducted with over 330 senior HR professionals, reveals that 85% of businesses increased pay in 2026, with respondents reporting an average increase of 3.5% across all sectors. The average employee can expect a pay increase of about 3.1% in 2027, with 83% of businesses expected to increase pay in 2027. Minimal respondents indicated any expectation of basic wage decreases in 2027.
Over a third of companies (35%) plan to increase their headcount in 2027, down from 37% forecasted for 2026 and 41% for 2025. Most new hires will continue to be for permanent roles, rising to 92% in 2026 from 89% in 2025. The primary drivers of additional headcount are increased production and demand for services (81%), business expansion into new markets (74%), and building a future pipeline of talent (56%).
Maeve McElwee, Ibec's Executive Director of Employer Relations, commented:
Headcount and access to Talent
While we are seeing a continued softening in headcount growth expectations, overall workforce resilience remains very strong. Even with a slight labour market cooling, employers continue to prioritise permanent recruitment and talent development to maintain competitiveness despite ongoing global volatility.
The report shows that recruiting necessary skills - both domestically and internationally - remains the primary focus for HR leads right now. Feedback in recent months from businesses indicates that attracting international workers into key sectors is hindered by overly burdensome visa and work permit procedures. Ireland remains unlike most EU countries that have adopted the Single Permit Directive (SPD), which ensures international talent deals with a single system. Employers are also reporting delays of up to 17 weeks for IRP cards which is impacting business travel. Attracting international workers easily is a critical component of meeting our labour market needs, most notably in sectors facing skills shortages such as hospitality, construction, and care.
Wage Growth
Basic rates of pay continue to rise steadily across all sectors and regions. While wage growth is expected to ease slightly toward 3.1% in 2027, rates remain largely determined by competition for specialised skills, productivity, and business performance. In the context of a volatile inflation landscape, linking wages to productivity rather than inflation ensures we avoid unconditionally imposing costs that most companies can only absorb by raising prices for their customers. As central banks have consistently warned, wages chasing inflation ultimately lead to more persistent inflation and higher costs for all households. In extreme cases, this can escalate into a 1970s-style wage-price spiral. Consistent growth in living standards can only be sustainably achieved through rising productivity, making the overall economic 'pie' bigger.
Operational Costs
The Low Pay Commission’s reported recommendation - a rate nearly double what some companies can afford or anticipated - is extremely concerning for businesses. Ibec has raised this with the Minister following the recent reports. Overall, hourly labour costs have increased by 15% over the past three years, and the minimum wage floor has risen by 32%. As identified in the Department’s Cost of Business Forum report, businesses are grappling with significant expenses that are likely to intensify heading into winter, further driving up operational costs.
Furthermore, given these cost pressures, it is surprising that funds from the employer-funded National Training Fund are not being urgently deployed to support employee training in areas like AI, where there is clear employee apprehension alongside an obvious business need to adapt. We appear to be creating unnecessary economic risk when Ireland is better placed than most economies to deploy these resources, support the skills transition, and ensure our workforce is well-positioned to benefit from this significant technological change.
Full report here
