Recent reports on the Irish economy show that Modified Domestic Demand, a better estimate of economic activity than Gross Domestic Product (GDP) in Ireland because it strips out some of the distortions caused by foreign multinational activity, rose by 0.3% between Q4 2025 and Q1 2026, spurred by personal spending growth of 0.8%.
Concerning the working class, the Central Statistics Office (CSO) figures for Q1 2026 show average weekly earnings at €1,075.58, up by 4.4% over the year. Average hourly earnings rose by 4.0% to €33.14. The CSO recorded CPI inflation over the same Q1 period at 3.0%. Thus, average earnings were slightly ahead of inflation on this measure, at least.
Averages likely conceal class realities. Higher-paid sectors obviously raise averages; many workers in retail, hospitality, care, logistics, security, cleaning, operational grades, and administrative support face much tighter conditions. Average annual earnings in pharma are €89,576, and in ICT are €89,910. Average economy-wide wages in 2025 were only around 60% of earnings in these two multinational-dominated sectors.
Moreover, the cost pressures facing workers are concentrated in essential goods and services. Housing, Water, Electricity, Gas, and Other Fuels were up 7.3% over the last 12 months, while Clothing and Footwear was up 7.0%. These are not luxury items. They form part of the basic cost of reproducing labour power.
The CSO’s Annual National Accounts for 2025 show that Net Operating Surplus and Net Mixed Income, a broad national-accounts proxy for profits and self-employed business income, rose by 18.8% across all sectors. In Industry, excluding Construction, it rose by 32.5%, reaching around €111 billion. These figures must be treated carefully because Ireland’s national accounts are heavily distorted by multinational activity. Nevertheless, they point to the considerable surplus being generated and recorded in the economy.
To be sure, the June PMI data suggest that firms are still confronting higher input costs, including fuel, freight, and raw-material costs. However, there is also evidence that many firms have been able to pass at least some of these costs on to selling prices, helping to protect margins. Why should workers be asked to absorb inflation through wage restraint while capital protects profitability?
At state level, public finances will feature in coming public sector pay talks as a means of dampening labour’s demands. Of note here is the Irish Fiscal Advisory Council’s June report. Leaving aside the Council’s bias towards balanced-budget and fiscal-sustainability orthodoxy, it warned that the Government’s spending path is growing faster than the durable growth rate of the economy and that Ireland’s planned net spending growth is the fastest in the EU. It also warned that most corporation tax receipts are being spent rather than saved: under Government plans, only €1 in every €6 of corporation tax is set aside, while €5 in every €6 is used for ongoing spending commitments.
The report is right to highlight the problem of overdependence on multinational corporation tax. However, rather than framing the answer around saving, expenditure restraint, buffers, and fiscal rules, the labour movement should ask why the state is so dependent on multinationals in the first place. A state geared to the interests of developing sustainable economies for working people would seek a more extensive, more durable revenue base: taxation of land, rents, capital gains, and excess profits.
In bargaining for wages, workers should also prepare for the employer argument that the labour market is cooling and that wages should therefore moderate. The labour market is certainly no longer tightening. The unemployment rate rose to 5.0% in June 2026, up from 4.9% in May and 4.6% a year earlier.
On balance, however, a modest rise here is not good grounds for wage restraint when prices and profits remain elevated. Economic uncertainty is real. Yet it is not a sufficient reason for labour to absorb all the risk while capital protects margins. Similarly, in challenging fiscal-prudence rhetoric, public-sector workers should remember that they did not create Ireland’s corporation-tax dependency. Nor should they be expected to pay for it through ‘reform and efficiency’ changes, essentially doing more with less, or through pay restraint.
Of course, if wage-price dynamics are to be ordered rationally rather than fought out through the anarchy of the market, then we are in the territory of arguing for democratic socialist planning, not asking workers to moderate their demands while profits and prices continue to rise.
