Don’t expect a big bump in your pay packet next year - average pay rises are falling

PAY RISES IN Ireland’s private sector are getting smaller, even as plenty of workers continue to feel the pinch from rising everyday costs.

A new report from the Chartered Institute of Personnel and Development (CIPD) found that the average salary increase in 2025 was 3.31%, continuing a steady downward trend in recent years.

For context, the average pay rise was 5.06% in 2022, dropping to 4.38% in 2023, 4.24% in 2024, and now just over 3%.

The outlook suggests the trend may continue.

Employers expect pay increases to fall slightly again in 2026, with the average rise projected at 2.96%.

Many workers are likely to notice that pay packets aren’t stretching quite as far as they used to. Food prices, for example, have risen 3.9% in the last year, according to figures from the Central Statistics Office, and the cost of petrol and diesel has skyrocketed in recent weeks as a result of the ongoing Middle East conflict.

The CIPD survey also found that 78% of private-sector organisations increased salaries in 2025, while the remaining 22% kept pay unchanged.

Looking ahead, 59% of employers plan to raise pay in 2026, though more than a quarter say they haven’t decided yet.

When it comes to what actually drives pay increases, the most common answers from employers included company performance, individual performance, and routine annual adjustments.

The report also suggests hiring may slow slightly in the coming year.

Just under half of organisations say they plan to increase employee numbers over the next 12 months, down from the 53% that grew their workforce in 2025.

Meanwhile, the housing crisis continues to make life difficult for employers trying to recruit staff, with 61% saying housing shortages are having a medium or high impact on hiring.