Ireland needs nearly 80,000 additional construction workers to address its infrastructure shortfalls—an increase of 47% from current levels—according to a new report by the Fiscal Council. However, with productivity improvements in the sector, fewer than 20,000 extra workers might suffice.
The report highlights that Ireland’s infrastructure per person is about 25% below the average for high-income European countries. While this gap has narrowed since 1995, the Fiscal Council points to persistent deficiencies in housing, health, transport, and electricity.
One of the primary challenges in delivering infrastructure projects is the planning system, which the report describes as having a “slow and unpredictable nature” that drives up costs and causes delays.
Niall Conroy, the report’s lead author, stated, “Ireland’s infrastructure deficits are long-standing issues which cannot be resolved overnight. They require a planned, multi-year approach.
“Ireland already spends a high amount on public investment relative to the size of its economy. The challenge is sustaining this, and getting better value for money.”
The report identifies low productivity in the construction sector as a “key issue” in addressing infrastructure needs. Current productivity is about 32% below average and less than half that of Norway, a benchmark country.
One contributing factor to low productivity may be insufficient investment by building firms. According to the report, “This is partially due to the boom-bust nature of the housing market in Ireland.”
“Investment in the construction sector has remained low since the financial crisis. The productive capital stock of the sector is 20% below 2008 levels.”
Another factor is that most Irish construction firms are small, with only two large companies—Cairn and Glenveagh—involved in house building. The report states, “Typically, larger firms are more productive in construction, as they are better able to invest in the latest technology.”
Ireland has been slow to adopt modern construction methods, which require 70% less labor and can reduce costs by 20-40%. According to the report, “A significant increase in the adoption of these methods could make it possible to produce much higher levels of housing with the same numbers of workers, and at a lower cost.”
Without productivity improvements, a larger construction workforce will be necessary to meet housing demands. “For example, to bring housing completions from 32,600 in 2023 up to 68,500 would require approximately 50,000 extra construction workers,” the report says.
When it comes to housing, the issue is no longer public spending, which has surged since 2015 and now makes up the second-highest share of national income in the eurozone. Around one-quarter of housing finance comes from the state, and meeting the target of 68,500 completions would require an additional €12 billion annually, with €3 billion coming from the state.
“However, as government spending on housing is already amongst the highest in the eurozone, one might expect much of the additional financing to come from the private sector,” the Fiscal Council report suggests.
It also notes that out of nearly 31,000 work permits issued last year, less than 5%—or fewer than 1,400—were for the construction sector.
