Pay compression has emerged as one of the most consequential workforce challenges in the UK and Ireland. New research from Iris Software Group, surveying 500 UK employees with two to five years of experience and 511 senior HR leaders, finds that the average salary gap between experienced junior employees and new recruits has narrowed to just £650 (approximately €767) a year. The result: 71% of young professionals struggle to find the motivation to train new hires who earn nearly the same.

The findings present a clear opportunity for talent management leadership. Pay compression is not simply a payroll problem; it is a retention crisis and an employer branding risk. Three priorities emerge: redesigning salary band reviews to catch compression before it triggers turnover, using data to identify where it is most acute, and treating pay equity for experienced junior staff as a strategic investment.

The frustration among young professionals is driving tangible action. Among the 69% who discovered a colleague’s salary and felt undervalued or frustrated, a third asked for a pay rise and 16% had already accepted another job offer. Stephanie Coward, Managing Director for Human Capital Management at Iris, noted that young professionals take on harder work and more responsibility but see almost no difference in their pay. The employee experience of compression is daily and demoralising.

The HR response is inadequate. Despite 84% of HR leaders expressing concern about losing valuable staff, only one in five planned targeted salary adjustments. Nearly half acknowledged salary bands are not reviewed regularly enough, and a similar proportion expected bands to narrow further. Around a quarter said their systems cannot compare pay with employee responsibilities, making compression invisible until it becomes a resignation.

In Ireland, the challenge is compounded by minimum wage legislation. Ireland’s national minimum wage rose to €14.15 per hour on 1 January 2026, adding direct upward pressure on entry-level pay without any corresponding obligation to lift experienced junior salaries. Employee wellbeing and motivation among mid-tenure staff is the predictable casualty.

Three actions will allow HR leaders to convert these findings into advantage. First, conduct an immediate pay compression audit, identifying where the gap between entry-level and experienced junior pay has narrowed below a defensible threshold. Second, implement six-monthly salary band reviews rather than annual cycles. Third, invest in compensation tools that link pay to skills and responsibilities, giving HR the visibility to intervene before experienced talent walks.

The Iris research gives Irish and UK HR leaders the evidence and the imperative to act. Organisations that treat pay compression as a governance issue, audit it systematically, and adjust proactively will retain the experienced junior talent that carries institutional knowledge and trains the next generation of high performers.