Irish businesses are expected to take a cautious approach to salary increases in 2025, with pay rises projected to remain between 2-3%, according to the latest Irish Salary Guide from recruitment firm Morgan McKinley.
Despite ongoing pressure from a tight labour market and rising living costs, companies are focusing on targeted pay hikes for high-demand roles rather than widespread salary increases.
“The days of across-the-board salary increases appear to be over, as firms adopt a more calculated approach, offering raises where they are most needed to address skill shortages,” the report stated.
Focus on High-Demand Roles and Structured Benefits
Instead of broad salary adjustments, businesses are emphasizing structured pay transparency and clear career progression pathways to attract and retain skilled professionals. Key sectors benefiting from this targeted strategy include technology, life sciences, and financial services.
“While overall pay growth is modest, demand for skilled talent in technology, finance, compliance, life sciences, projects and change, and construction gives professionals in these fields strong negotiating power,” said Trayc Keevans, Global FDI Director at Morgan McKinley.
She added that employers must adopt a strategic approach to compensation and benefits to maintain their competitive edge in securing top talent.
Flexible Working Remains a Priority
The report also highlighted the ongoing demand for flexible working arrangements. Among surveyed employees, 67% valued the option to work remotely, while 56% prioritized flexible working hours. This trend reflects the growing importance of work-life balance as a key factor in job satisfaction and retention.
Balancing Wage Growth and Cost Management
Although 44% of companies reported raising salaries within the past six months, businesses remain cautious about the risk of wage inflation, according to Ms. Keevans. This cautious stance is driven by economic uncertainty and the need to balance competitive pay with sustainable cost management.
By focusing on selective salary increases and non-monetary benefits, Irish employers aim to address talent shortages while maintaining financial stability. As a result, professionals with sought-after skills can expect stronger negotiating power, even as overall wage growth remains modest.
