PricewaterhouseCoopers Launches its Latest Snapshot Survey on Irish Salary Increase Trends Showing Projected Overall Average Salary Increases for 2006 to be 4.8%

PricewaterhouseCoopers (PwC) launched the ninth in a series of Snapshot Survey reports in January 2006. This latest report, on 2005 & 2006 Salary Increase Trends, gives up-to-date information on the latest base salary increase trends across a variety of sectors and employee categories in Ireland.

Key findings from the survey include:
 
Projected total base salary increases across all sectors for 2006 average 4.8%. This compares to actual average increases awarded across all sectors in 2005 of 5.5%.
 
 
The Banking/ Financial Services sector shows the highest average projected increase for 2006 of 5.8%. However, this is quite a bit lower than the 7.3% actually awarded in 2005.
 
 
The ICT sector shows the lowest projected average increase for 2006 of 4.0% compared to 4.6% in 2005.
   
 
Actual average increases in 2005 for categories of staff were – Executives 5.5%, Senior Management 4.9%, Middle Management 5.5%, Professional 5.0%, Clerical 5.3%, Manual/Line Worker 4.5%.
   
   Projected average actual increases in 2006 for categories of staff are – Executives 4.6%, Senior Management 4.6%, Middle Management 4.7%, Professional 4.5%, Clerical 4.7%, Manual/Line Worker 4.2%.
 
   Three out of ten respondents indicate that the projected salary budget for 2006 will be less than the 2005 salary budget.
 
 
Speaking at the launch, Mark Carter, Partner, PricewaterhouseCoopers HR Services, said:
“Workforce costs constitute one of the largest costs for many organisations. Effective management of employee remuneration is critical for running a business in a profitable manner, at the same time enabling the business to attract and retain the appropriate calibre of employee required to meet organisational objectives. While employee expectations seem to continually increase, Irish employers face the ongoing challenge of juggling such expectations in the context of tight pay budgets. HR and Finance executives may regard the salary planning process as a tedious event but the impact of the resultant decisions they make can have a profound impact on the business. A rigorous remuneration benchmarking process provides reliable data, and gives employers a rational frame of reference to establish, maintain, communicate and, where necessary, defend pay decisions.

There continues to be confidence in the employment marketplace, and pay will continue to be under the spotlight during 2006. Indications are that organisations can expect to come under renewed pressure to retain key talent this year.”
 
Maeve Heffernan, Senior Manager, PricewaterhouseCoopers HR Services, said:
“Overall, employers are expecting salary increases in 2006 to be slightly less than increases actually awarded last year – 4.8% compared to 5.5%. Yet again, we expect to see the Financial Services Sector awarding the highest salary increases in 2006 (5.8% forecast). By contrast, the ICT sector is planning the lowest level of increase (4.0%).

Having said that, the actual average increase for 2006 could well end up being higher as the trend in recent years has been to award larger actual increases than those predicted at the beginning of the year. At the end of 2004, participants in the PwC Survey predicted that average increases for 2005 would be in the region of 4.6% but the actual increases turned out to be 5.5%.

The winners in 2005 were Executive and Middle Management employees who were awarded on average an actual increase of 5.5% of base salary. The lowest percentage increase reported was awarded to ‘Manual/ Line Workers’ (4.5%).
1. The survey was carried out during October and November 2005 amongst leading organisations across all business sectors in Ireland.
 
2. Base pay or salary represents guaranteed annual cash earnings. It does not include shift allowances, overtime, bonuses or benefits.
 
3. Actual Increases for 2005
Across all sectors an average increase of 5.5% was actually awarded in base salary for 2005. The Banking/ Financial Services sector reported the highest average percentage increase of 7.3% in base salaries while the ICT sector reported an average increase of 4.6%, and for the Pharmaceutical/ Healthcare sector 4.3% of base salary.
4. Projected Average Increases for 2006
Overall, across all sectors a 4.8% increase in base salaries is projected for 2006. Again, the Banking/ Financial Services sector reported the highest projected base salary increase of 5.8% in 2006 compared to a projected increase in base pay of 4.3% in the Pharmaceutical/ Healthcare sector and 4.0% in the ICT sector for base salary increases in 2006.
5. The contents of the report includes:
   Base Pay Policy – Salary Review Practices and Base Pay Philosophy;
 
   Base Pay Increases for 2005 – Overall Increases, Increases for Executives, Senior Management, Middle Management, Professional Employees, Clerical Employees and Manual/ Line Workers;
 
   Projected Base Pay Increases for 2006 – Overall Projections, Projections for Executives, Senior Management, Middle Management, Professional Employees, Clerical Employees and Manual/ Line Workers.

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