Most workers believe inflation will hit real value of wages - survey
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- 01 Jun 2022
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A survey conducted on behalf of the Central Bank finds a majority of Irish workers believe the real value of their earnings will fall this year due to inflation.
In an Economic Letter published today, 91% of respondents in April believed consumer prices will either increase more rapidly or at the same rate over the next 12 months.
This is up from 84% of respondents in February.
The Central Bank also said that respondents believed average inflation would be 10%.
The survey found women, lower income groups, less educated groups and older people all had higher inflation expectations.
Almost 63% of respondents cited the cost of living as one of the most important issues that Ireland faces.
Just over half of respondents said they expected their earnings to "stay about the same" over the next 12 months.
Just under a third, or 31%, expected their earnings to "increase slightly" down from 38% in February.
Of those who expect their earnings to increase, a "'vast majority" don’t expect any increase to keep pace with inflation.
The letter quotes earlier Central Bank forecasts that compensation per employee is expected to increase by 2.3% this year but to decline in real terms by 4.2% due to inflation, which the bank expects to average 6.5%.
The survey found that those on higher incomes have higher earnings expectations, although expectations have declined "across most income levels."
People employed in customer-facing services like retail and accommodation are more pessimistic and have the lowest earnings expectations.
Around a quarter of employed respondents said they had taken some action in the past three months to seek a pay rise. But the percentage of respondents who said they had not taken any action, increased from 43.6% in February to 52.9% in March.
The Central Bank letter says "this may indicate a relative weakening of perceived bargaining position, increased uncertainty, or declining sentiment since the war in Ukraine broke out, despite the buoyant labour market."
It goes on to say that stronger wage demands "may surface in time" if the labour market remains strong and expectations about future levels of inflation increase. Read More...
