Around half of businesses and employees are expecting pay to rise by between 3-4% on average this year.
It's one of the findings in the latest Bank of Ireland Economic Pulse survey.
It says abating fears over the impact of the omicron variant has led to a boost in both consumer and business sentiment.
The bank's group chief economist Loretta O'Sullivan says many firms are very much looking to increase their payroll.
"Firms are looking to retain and attract staff, so at least half of them are planning on increasing pay.
"Some of this is released to labour shortages in sectors, it's also due to productivity increases as well in recent times."
