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Pay – developments post economic crash!

The economic crash and ensuing financial crisis post-2008 had a huge and unprecedented impact on the Irish labour market and on employee incomes.

Unemployment in mid-2008 was at a historic low of 5% but rose quickly to reach a high of 16% in early 2012.  Closures, redundancies and short time working were the order of the day.  From the unemployment high water mark in early 2012, the job situation has improved slowly but consistently to reach a record low of 5.1% unemployment by mid-2018.  While pay cuts characterised the public sector, large scale redundancies and job losses were implemented across the private sector.  In our agri-business sector, pay cuts were rare and were mostly restored within a reasonably short period.  However, pay freezes were the order of the day for a number of years across most of the industry following the suspension of social partnership which had broadly set pay increases for the previous twenty-one years, i.e. 1988 to 2009.

Personal taxation rates increased dramatically post-2008 as the Government struggled to bring the public finances under control.  PAYE rates were increased and USC introduced leading to significant reductions in take home pay for all employees.  In recent years as the economy has improved, these increases in personal taxation have only been partially remedied.

Following a few years of pay freeze, modest pay increases in the range of 1% to 2% p.a. were conceded by some employers post-2012.  Unlike pre-2008, all private sector pay bargaining is now undertaken at local enterprise level and there is little likelihood of a return to social partnership pay settlements in the foreseeable future.

The norm for pay increases across the agri-business sector in 2018 falls in the range of 2.0% - 2.5% per annum.  Company profitability and margin are key determinants influencing pay settlements together with wider salary comparability with other enterprises in the sector.

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