Should Irish workers expect a pay rise in 2021?

With a ravaged economy and the majority of people now working from home, we ask Kieran McKeown of Matrix Recruitment his thoughts on wages and salaries in Ireland for 2021.

In his company’s latest 2021 Salary Guide, Matrix Recruitment forecast that the pandemic will have no adverse impact or effects on salaries, despite the damage done to the wider economy.

According to McKeown salaries across a wide range of sectors including finance, manufacturing, engineering, IT and quality and laboratory, will be in line with last year, although the recruitment expert is anticipating marginal increases in specific industries and roles, particularly where there may be skills shortages.

“We do not anticipate that many employees will be expecting a pay rise this year, given we are still dealing with a global pandemic”

The Matrix Salary Guide indicates 2021 is looking positive for those working or looking to work in financial services, bolstered by the fact that Ireland has become a top choice for financial institutions relocating from the UK on the back of Brexit.

What you can earn and where

This year, financial controllers (financial services) can expect a salary of between €60K – €85K, while risk officers can expect to earn between €45K – €60K, both of which are in line with 2020 salaries. 

While salaries for many roles are not expected to see an upward move in 2021, certain areas can expect to see modest growth, especially in the capital. For 2021, a credit union lending/ loans officer, for example, can expect to command a salary of up to €45K (up 17% on 2020 figures).

Worth noting is the significant difference in salary expectations and offerings often seen between Dublin and the rest of the country. Credit analysts, for example, can expect to earn between €30K – €45K in Dublin this year; regionally, however, this drops to between €24K – €30K.

Accountancy went through huge technological advancements over the past 12 months, accelerated by Covid-19. As a result, the demand for highly skilled technical accountancy talent has increased significantly, keeping salaries competitive. In Dublin, a financial director can expect to earn between €150 – €200K. The starting salary in the Midlands and the West of Ireland for the same role is €100K and in the South East, €120K. Landing a job with one of the Big 4 means a newly qualified accountant can earn between €50 – 65K in the Dublin market, but if located in the South East, the salary range is closer to €45 – €50K.

A financial controller (accountancy) can expect a starting salary of €80K, regardless of location, which is good news for those looking beyond the capital for their career progression.

We asked McKeown for his thoughts on the overall outlook for salaries this year across professions, regions and workplace situations.

Are many people in the working world expecting pay rises this year (2021)? 

We do not anticipate that many employees will be expecting a pay rise this year, given we are still dealing with a global pandemic. Nor do we predict that many employers will be in a position to offer significant pay rises to employees, especially for the first six months of the year when lockdowns and interruptions to businesses are likely to continue. However, there are some sectors that are bucking this trend, which is good news for those working or looking to work in sectors such as financial services, IT and manufacturing sectors, which we forecast will be in a position to increase pay scales during the year.  This is based on our client insight and data and is reflected in our 2021 Salary Guide.

Candidates can also expect to see pay rises in areas where there may be a shortage of talent. Small talent pools are particularly evident in the Technical and Engineering disciplines, so we would expect to see salaries in these areas increase to fill talent gaps and attract candidates to the role.

Will employers be actively looking at adjusting salaries based on people working from home? (commute costs down but other costs like broadband and electricity up)

We don’t see this as a factor in salary adjustments just yet, but employers may do so in the future if remote work became a full-time option.

In the short to medium term, most employers envision a hybrid work model. In this scenario, there will no need to adjust salaries as commute costs (which are accounted for in salaries), and working from home bills like broadband/electricity would, for the most part, balance each other out. With a physical workplace still in play, employers will still need to pay the common overheads that come with running a business such as rent and rates, electricity, broadband etc so there is currently no strong rationale for adjusting salaries.  In fact, flexible remote work would be considered an added benefit offered to staff in addition to their current pay.

However, employees should not be expected to pay for business costs such as broadband, heating and office furniture when working remotely on a fulltime basis, so this is something that employers will have to consider as we enter this new era. A combination of employer allowances together with well-structured and more generous tax reliefs will be needed if this remote working model is to work. This will be especially crucial if the government is serious in its plans to bring forward legislation that would grant people the legal right to work from home.

You mention the rise of the regions – why is there such a disparity in salaries and will this change now that many people who used to work in the cities but live in and around commuter belts are now working at home?

Capital cities and other major cities, both domestically and globally, have traditionally offered higher salaries, weighted to reflect the higher cost of city living.  Additionally, most major companies are located in cities and competition for top talent can be fierce.  Businesses therefore need to set salaries at a level that will attract the best candidates, especially where there is a shortage of skilled workers. It is for this reason that Dublin has historically had higher salaries and better benefits packages, compared to the rest of the country.

As illustrated in our Salary Guide for 2021, salaries in some sectors may differ by as much as €20K – €30K between Dublin and the regions.  So far, we have not seen working from home impact salaries in any of the regions. We anticipate that salaries in Dublin will remain at the higher end and we don’t see this changing, unless employees are invited to work remotely, permanently. This may lead to a rebalance or redress of the current disparity between Dublin and regions, but any movement is likely to be slow, and remuneration packages will still need to reflect the local cost of living.

By John Kennedy (john.kennedy3@boi.com)

Published: 20 January 2021