A majority of businesses in Ireland plan to raise pay in 2025, though less than half plan to increase headcount, according to a report by Ibec, a group that represents and lobbies for Irish business.

Ibec’s survey of more than 400 senior HR professionals in Ireland found that 84% of businesses are planning to increase pay in 2025, with the average increase at 3.4%.

“Despite easing inflation, wages are expected to continue rising, following trends seen in recent years,” Maeve McElwee, Ibec’s executive director of employer relations, said in a press release. “This is largely driven by changes in the minimum wage and increased competition for talent.”

Looking at 2024, Ibec’s report found that 85% of Irish firms increased basic pay rates this year, and the average increase was higher at 4.1%.

The report also asked about expected headcount. It found that 41% of respondents expect to increase headcount in 2025, while 53% expected it to remain the same and 6% foresee a decrease. The average increase in headcount is 7.2%, which is down from the average increase of 9.4% in 2024.

Top drivers for the need for additional headcount were “increased production/demand,” “business expansion” and “to build future talent pipeline.”

The percentage of firms planning to add headcount is also down from 45% in 2024 and from 54% in 2023.

“While hiring may be slowing due to higher operating costs, recruitment challenges, and slower global growth, skills shortages in certain areas are likely to persist,” McElwee said. “Employers — and Ireland as a whole — must continue to innovate in strengthening the talent pipeline.”