IRISH EMPLOYERS’ GROUP IBEC has warned that any expectations of widespread pay rises over the next 12 months are unrealistic.

Despite recent data suggesting some companies will start hiring in 2012, pay rises are not likely, the group said today following the release of its new pay survey.

In fact, 74 per cent of companies will either freeze or reduce pay rates in the coming year, said IBEC.

Pay expectations need to reflect current economic realities; pay rises in 2012 are unrealistic.”

The less-than-optimistic survey also claimed that Budget 2012 decisions to reduce the redundancy rebate and abolish employers PRSI relief on pensions will add to inflation this year, leading to increased labour costs and damaged competitiveness.

“Job protection and creation remains the priority for most businesses,” said IBEC director Brendan McGinty. “This means pay restraint nationally and an unwavering focus by Government on restoring competitiveness. Companies are focused on getting costs back in line with our trading partners. This is vital if we are to restore our economic fortunes.”

About 69 per cent of firms surveyed intend to apply a pay freeze during the year, while 5 per cent will be aiming to reduce their employees’ basic pay.

However there is good news for some employees as about one quarter of the 400 firms surveyed expect to increase basic pay rates by an average of 2 per cent.

The majority of those companies expect improved productivity, increased workforce flexibility and new product/service development.

EU data has shown that Ireland’s hourly labour costs dropped 1.1 per cent last year – the only Member State to show a decrease. However, wage levels remain about 15 per cent higher than the average in the EU15, noted IBEC.