Firms block pay rises due to budget constraints, driving up staff turnover.
Budget constraints and poor business performance are forcing 61% of Irish employers to delay or reduce pay rises, according to new research from global talent solutions firm Robert Walters.
Nearly half are experiencing increased staff turnover as a direct result.
“When salaries are constrained, culture and communication matter more than ever”
The study reveals a growing disconnect between employer decisions and employee expectations, with 63% of workers who didn’t receive a pay rise now actively seeking new employment.
Even among those who did receive increases, 56% said the amount was lower than expected.
Turnover and disengagement on the rise
The consequences of constrained compensation are becoming clear: 45% of Irish business leaders report a direct increase in employee turnover after deferring pay rises, while over a third (38%) believe delayed increases are driving employee disengagement.
“Businesses are under immense pressure to keep costs down, and for many, salary increases just haven’t been feasible this year,” says Suzanne Feeney, country manager at Robert Walters Ireland. “Our research shows that these decisions, while understandable, are not without consequence. Whether it’s higher turnover or a gradual drop in motivation, companies are starting to feel the effects.”
With an evolving economic landscape, many employers are prioritizing cost control, often meaning deferred or scaled-back salary reviews. However, this approach is creating wider implications for morale, employee retention, and company culture.
AI tools accelerate job searching
The impact extends beyond traditional job-hunting methods, with technology making it easier for dissatisfied employees to explore alternatives.
“There’s a clear message here: even if employees understand the business pressures, unmet expectations are still pushing them to reconsider their options. And with AI tools streamlining the job application process, employees have more opportunities than ever to explore new roles,” Feeney added.
Market data critical for retention
Sinead Hourigan, global head of Talent Advisory, CX & Commercial at Robert Walters, emphasised the importance of data-driven compensation discussions: “This is where salary benchmarking and market insights become so important. Workers who haven’t seen a pay rise may be planning to discuss salary in their mid-year reviews, and employers will need market data to communicate credibly, demonstrate fairness, and manage expectations.”
Beyond compensation, Robert Walters recommends employers consider alternative retention strategies, including meaningful career development, flexible working arrangements, and internal mobility pathways.
Communication and culture key when pay is constrained
“We’re seeing more employers ask how they can retain their best people when pay increases aren’t on the table,” Hourican concluded.
“When salaries are constrained, culture and communication matter more than ever.
“The organisations that succeed will be those that balance cost control with a thoughtful, market-informed approach to employee engagement.”
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