Ireland’s pay growth is slowing, and for the first time in years, it is not keeping pace with inflation. According to Ibec, the country’s largest employer body, the average Ireland pay increase for 2027 will be around 3.1%, based on a survey of over 330 senior HR professionals. Consequently, businesses budgeting for next year face a tighter margin than the headline figure suggests.
Why this pay increase falls short of inflation
At first glance, 83% of Irish businesses planning to raise wages sounds like continued strength. However, that 3.1% average sits below Ireland’s current inflation rate. Consumer prices rose 3.7% between August 2025 and August 2026, according to the Central Statistics Office. Therefore, most employees receiving the average increase will see their real purchasing power stay flat, or fall slightly, once inflation is accounted for.
Moreover, this marks a shift from 2026, when 85% of businesses raised pay by an average of 3.5%. The gap between wage growth and inflation is narrowing the room employers have to compete on pay alone.
Hiring plans are cooling, not stopping
At the same time, headcount growth is slowing. Only 35% of businesses plan to increase headcount in 2027, down from 37% forecast for 2026 and 41% for 2025. Additionally, 8% of businesses expect to decrease headcount next year.
Still, this is not a hiring freeze. The main drivers behind new hires remain increased production and demand, expansion into new markets, and building a longer-term talent pipeline. As a result, companies that are hiring are doing so more selectively, with pay increasingly tied to specific skills rather than applied across the board.
Visa and work permit friction is limiting access to talent
Perhaps the most practical finding for foreign employers concerns international recruitment. Ibec reports that businesses are struggling to bring international workers into key sectors, citing visa and work permit procedures as overly burdensome. Consequently, Ibec has raised this issue directly with the responsible Minister, pointing to it as a growing constraint on workforce planning.
For companies setting up or expanding a team in Ireland, this means permit timelines deserve attention early in the planning process, rather than being treated as a formality once a role is filled.
What this means for companies operating in Ireland
Taken together, these findings point to a more selective Irish labour market. Pay increases remain the norm, but they no longer outpace the cost of living by a comfortable margin. Hiring continues, but headcount growth is concentrated around specific business needs rather than broad expansion. And bringing in talent from outside Ireland now requires factoring in permit delays as a real planning variable.
Consequently, Italian companies with a presence or plans in Ireland should treat 2027 workforce budgeting as a targeted exercise, not a repeat of previous years’ broader increases.
How Kelmer Group can help
Kelmer Group supports Italian and European businesses operating in Ireland with HR advisory, payroll administration and market entry services, helping you plan realistic pay bands and navigate work permit requirements for international staff.
Contact our Dublin team at kelmer.com/dublin/
Source: RTÉ — Wages expected to increase by 3.1% next year, https://www.rte.ie/news/2026/0917/1591831-ibec-pay-increase/