Key Strategic Employment Issues to Consider for 2022 - #1
The Context for Private Sector Pay Discussions will remain uncertain through 2022.
Stratis remains of the view that temporary inflation pressures cannot set private sector benchmark for longer term pay increases.
Guidance has been issued by the Private Sector Committee of ICTU on 13.12.21 that unions should seek pay increases in the range of 2.5 to 4.5% in 2022. However, Stratis remains strongly of the view that:
Any increase in the level of pay settlements which will embed long term employer costs cannot be justified by temporary inflation pressures.
Pay increases will remain off the agenda for some employers reliant on the Irish domestic economy.
The additional cost of Statutory Sick Pay will have to be factored in to payroll costs in 2022.
Employers should be mindful of any knock on affects that conceding a claim may cause for other employers in their sector, region or nationally.
Amidst recent concerns about rising inflation trends, (with CPI of 5.3% in the year to November 2021), the impact of the base effect on price movements remains unclear. However, most forecasts see these trends as transitory due to energy and supply bottleneck issues which are more likely to ease through 2022. It is also worth noting that for those workers across the public and private sectors who have benefited from pay adjustments over the last few years, these delivered real increases in wages, despite the worst effects of the Covid-19 pandemic. This is evidenced by the fact that inflation (CPI) from January 2019 to December 2020 was only 1.0% whilst the annual inflation rate for 2020 was negative at -0.3%.
The ECB has repeatedly said it sees eurozone inflation as a temporary phenomenon. It is also striking that the European Commission has, in its most recent autumn forecasts, estimated that whilst inflation in Ireland, could average 3.1% in 2022, it will pull back to average at 1.5% in 2023. Ibec too in its most recent forecasts (Q4, 2021) is predficting an inflation outturn of 2.4% in 2021 and significantly even the trade union supported Nevin Institute, is of the view that inflation will peak in Q4, 2021 before settling back to circa 2% in the second half of 2022 with an average close to 2% thereafter.
In November 2021, Stratis published detailed advice for employers on the issue of pay discussions for the private sector and is available here.
If you would like to talk to us about any of these issues, or about engaging your people through the period ahead, please get in touch with me at email@example.com or any one of our Partners.
‘Strategic Employment Relations’
T: +353 (0) 1 2166302
M: +353 (0) 87 2433038
Disclaimer: The information in this article is for practical guidance only and does not constitute legal or case specific advice. The answers to specific situations will vary depending on the circumstances of each case. This is not a substitute for specific professional advice relevant to individual circumstances facing your business.