Unions representing workers in the private sector should be in a position to seek pay rises of between 2.5 per cent and 5 per cent next year, the Irish Congress of Trade Unions (Ictu) has advised.

It said this would be subject to prevailing conditions in the enterprise concerned.

Ictu also said unions should “give consideration” where appropriate to the issue of a living wage of €11.50 being introduced. This would be higher than the statutory minimum wage which will be set at €9.15 per hour from January.

Campaigners argue that the living wage is the amount needed by workers to provide a decent quality of life.

In a bulletin on pay issued on Monday, the private sector committee of Ictu said analysis undertaken by the Nevin Economic Research Institute and other bodies suggested the economy would grow very strongly in 2016.

However, employers’ organisation Ibec said suggestions of pay rises of 5 per cent were “completely detached from the reality of the economy”.

Ibec chief economist Fergal O’Brien said there was no cost-of-living justification for such rises as there was zero inflation in the economy this year and the rate will possibly be 1 per cent next year.

‘Inevitably reverse’

He said while there may be eye-watering growth rates of 6 or 7 per cent being recorded, these were based on temporary and external factors such as cheap oil, cheap money and a favourable exchange rate. He said these would inevitably reverse in the years ahead.

Mr O’Brien said it would be “dangerous” for pay expectations to be based on such temporary factors.

Ictu said average hourly earnings increased by just over 2 per cent from €21.02 to €21.46 in the third quarter of 2015 compared with the same period in the previous year.

“The average weekly paid hours worked were 32.1 in the third quarter of 2015. This was a 0.6 per cent increase on the same period on 2014.

“Average weekly earnings were €688.80 in the third quarter of 2015. This was a rise of 2.7 per cent from €670.53 a year earlier.”

The Ictu private sector committee bulletin said average hourly earnings increased in 10 of the 13 main economic sectors in the year to the third quarter of 2015, while average weekly earnings increased in 11 of the 13 main economic sectors.

“The two exceptions were construction and public administration where earnings fell.”

Private sector unions affiliated to Ictu represent between 350,000 and 400,000 workers in the Republic.

Pay freezes

While everyone in the public service experienced pay cuts over recent years, pay freezes were more common in the private sector - although reductions were widespread in some areas such as the media.

Even throughout the recession, pay increases were secured in some areas.

Since 2011, the trade union Siptu negotiated rises of about 2 per cent per year in about 300 companies in areas such as pharmaceuticals and medical devices.

Other unions such as Mandate in the retail sector also successfully negotiated pay increases for members, mainly in the 2-3 per cent range, as did the TEEU.

In the public service about 300,000 staff will receive increases of €2,000 in earnings between January 2016 and September 2017 under the terms of the Lansdowne Road agreement.