Brian Lenihan: key factor

Pay and job prospects are set to improve next year for those working in large multinationals, but employees of smaller companies will have to wait a little longer for the upturn, according to two contrasting pay and employment surveys released over Christmas.

In the more optimistic survey by Mercer Consultants, four out of 10 foreign multinational and large Irish companies indicated they would resume pay increases of around 3% for workers in 2010.

Looking back on 2009, Patrick Robertson, senior consultant with Mercer, said that while around half of the larger companies froze pay last year in an effort to get costs down, just 9% actually cut pay.

"Companies are seeking to reduce the cost of doing business by various means. However, cuts in pay rates are the exception in the larger organisations," noted Robertson.

This supports the unions' argument that pay cuts are not widespread, a key factor in finance minister Brain Lenihan's unilateral decision to cut public-service pay in last month's budget.

The Mercer survey also found that 12% of these larger companies introduced unpaid leave in 2009 instead of pay cuts. Lenihan rejected the union's offer to take 12 days' unpaid leave next year before proceeding with pay cuts.

According to Mercer's upbeat look at the year ahead as the worst year on record for job losses comes to an end, the number of large employers saying they will cut jobs next year has halved to just 15%.

"There is some reason for optimism in the survey results," noted Robertson.

By contrast, a survey by PricewaterhouseCoopers of a larger number of smaller, mainly Irish, companies found that a third of them expected to cut more jobs this year. Two-thirds of the companies surveyed expected to freeze or cut pay. Just one in 10 said they expected to increase pay next year.

"In the next 12 months, employers will keep close control of headcount and pay," said Mark Carter of PricewaterhouseCoopers.

Almost half of the companies surveyed said they would "redesign" bonus schemes and incentive payments for management staff.

"It is unsurprising that bonus and executive long-term incentive plans are coming under the spotlight. Given the increased calls for greater clarity and transparency in relation to 'pay for performance', there is growing realisation that bonuses should be driven not by annual performance but measured over a period of time that will be more tied to the activity in question," said Mary O'Hara of PwC.