Eight out of 10 medium-sized and large employers increased staff salaries last year – and half of the same cohort intend to raise pay rates next year.
The figures are based on a study of businesses with 50 or more staff for Adare Human Resource Management’s HR Barometer.
More than a third of businesses that plan to raise pay next year will do it across the board, for all staff, while a slightly lower 32pc of firms will offer performance-related rises, the research found.
The findings are based on research among human resources professionals at 260 organisations that collectively employ more than 46,000 people.
It found a “significant” increase in the proportion of employees who cite salaries as the main reason for leaving their current job.
While staff turnover levels remain relatively stable – forecast to be an average of 11pc this year compared with 10pc in 2017 – there were marked differences in the reasons cited for changing jobs this year.
Lack of career progression was the main reason given by people changing jobs in 2016, cited by two-thirds of leavers.
Higher pay was the prime driver for one in five exits.
However, last year, fewer job-changers cited career progression (43pc), while pay was a factor of almost one-in-four. A further 9pc cited improved benefits.
The big focus on pay flies in the face of much of the accepted wisdom about what motivates so-called Generation Y and Millennial workers, who are supposedly more interested in purpose than profit, said Adare Human Resource MD Derek McKay.
But he said it reflects the reality of competition for workers.
“In some ways this was to be expected given the healthy state of the economy at present,” said Mr McKay.
“This is a signal to employers that a change in strategy is required.”
The data highlights the value of retention as the best option for employers – the research found that the average cost of replacing an employee has more than doubled to €13,100 since last year.
Another contrast with last year is an increase in the proportion of organisations facing human resources disputes this year, rising to 38pc of organisations surveyed, from 26pc in 2017.
For bigger employers the prevalence of HR issues was higher, with 45pc experiencing a dispute in some form.
Disciplinary and grievance issues are cited as the most common form of dispute.
Staff turnover and staffing issues are on the rise.
“This will place an immense cost burden on those organisations and it is not surprising that they are responding with offers of increased salaries.”