Updates from Ibec CEO Danny McCoy

CEO Update: Safeguarding Our Labour Market Success

Friday, 18 September

The latest CEO Update to Ibec membership from Danny McCoy

Last week, the OECD published their triennial PISA rankings, capturing the academic performance of 15-year-old students in solving complex problems, thinking critically, and communicating effectively. In a European context, Irish students ranked first for reading, third for science and fourth for maths out of 27 EU countries. Aggregated across all metrics, we’re the 2^nd highest ranked country in the EU, and the 9^th highest globally. This is a commendable achievement and one that business can look at with optimism for the future. Access to talent and a skilled workforce capable of navigating transition are two core pillars of any labour market framework that can deliver sustained business success.

Yet as we approach Budget 2027, we know businesses are facing challenges on these pillars, while ongoing increases to input costs continue to place a heavy strain on our members' operations.

Delivering Sustainable Labour Cost Policies

According to Ibec’s latest HR Pay Survey, 85% of businesses raised pay by an average of 3.5% in 2026, while 83% plan to offer an average 3.1% increase in 2027. As you will be aware we have made several public interventions and written directly to the Minister on the Low Pay Commission’s reported recommendation, a rate nearly double what some companies are forecasting.

Much commentary has been afforded to public sector pay talks in recent weeks, particularly calls for unconditionally indexing wages to inflation, a move that Ibec strongly opposes. Linking wages to inflation ahead of productivity imposes costs that most companies can only absorb by increasing prices for their customers. Central Banks have consistently warned that wages chasing inflation ultimately leads to more persistent inflation and higher costs for all households, risking a 1970s-style wage-price spiral.

Furthermore, linking only public sector wages to inflation creates an unfair asymmetry. These costs are passed on to other workers through higher taxes or reduced services, creating spillover expectations that are unachievable in the private sector without driving up prices. Ultimately, pay must reflect society's ability to pay for it; consistent growth in living standards can only be sustainably achieved through rising productivity making the overall economic pie bigger.

Workforce Readiness and the AI Transition

Ibec has consistently argued that funds from the employer-funded National Training Fund are not being urgently deployed to support employee training in areas like Artificial Intelligence, where there is clear employee apprehension alongside an obvious business need to adapt.

While Ireland may not yet be a global hub for AI development, we can equip our workforce to be globally renowned as "AI natives," which will provide a real competitive advantage for us. To achieve this, we need to considerably alter our approach to lifelong learning. Currently, our participation rate sits at 48.3% - above the EU-27 average of 39.5% - but we will fail to fully realise our long-term AI economic potential without a deliberate shift in our national approach. To that end, we have launched our latest report detailing the operation and economic value of the Skillnet model, one of many industry-led programmes chronically underfunded in light of the scale of workforce transformation taking place. We are on the precipice of profound change as a result of AI, and as a country, we cannot be passive or hold back our intent or resources.

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 technological shift. These were all points we raised last week at our “AI in Action” event with Henna Virkkunen, European Commission Executive Vice-President for Tech Sovereignty, Security and Democracy. A reminder that Ibec members have access to our AI Hub, which provides practical resources designed to help HR teams mitigate risks, balance legal requirements, and maximise workplace opportunities.

Access to International Talent and Competitiveness

Finally, international talent underpins Ireland’s economy, yet systemic barriers remain. Before such talent comes to Ireland, they must deal with two separate Govt Departments to get their visa and work permit, making it a more elongated process than it needs to be. Most EU countries have adopted the Single Permit Directive which ensures international talent only has to deal with one system/process to acquire all they need to move here. Coupled with this, unacceptable 19-month delays for non-critical skills family reunification actively discourages top talent from relocating here.

We must also combat rising societal division, such as anti-immigration and anti-LGBT+ hostilities fuelled by misinformation. Business has a duty to support affected colleagues and stand against narratives that threaten our social and economic fabric. You can find more information on this via our Open for Business campaign.

Despite these challenges, our continental partnerships remain a significant positive. Demonstrating this scale, European firms directly employ 270,000 people in Ireland—10% of our workforce. Later this month, we are launching a first-of-its-kind report quantifying the immense impact of European enterprise on our economy. I invite you to join us for the official launch on Tuesday, 29th September, at the Irish Film Institute in Temple Bar. Featuring a keynote by Minister of State Thomas Byrne and a senior industry panel, the morning will explore how European integration actively powers business growth and operations in Ireland. You can register to attend here.

To ensure the business community's voice rings clear throughout the EU Presidency, we have also developed a ready-to-deploy 'Campaign in a Box' toolkit. It includes plug-and-play social media assets, adaptable core messaging and a podcast focused on how Ireland’s Presidency has performed to date. The content is available here.

Regards,

Danny McCoy

CEO, Ibec