ESRI warns Ireland cannot meet housing and infrastructure targets due to labour shortages

Labour shortages could derail Ireland’s housing and infrastructure targets, with 80,000 more workers needed, the ESRI warns

The ESRI has revised down its housing completions projections to just 33,000 this year and 37,000 next year.

It is “extremely difficult to conceive” how infrastructure and housing targets can be reached over the short and medium term given the constraints in the labour market which will leave ministers with difficult decisions to make, the Economic and Social Research Institute (ESRI) has warned.

In its latest quarterly economic commentary, the ESRI has revised down its housing completions projections to just 33,000 this year and 37,000 next year.

The ESRI had previously published projections which found Ireland would need 53,000 new homes on average annually up to 2030 to keep up with population growth even without factoring in all the pent-up demand from years of undersupply.

At the same time the Government is trying to increase the number of new homes being built, Alan Barrett of the ESRI said it was also in the middle of trying to deliver on an “enormously ambitious National Development Plan”.

Mr Barrett said to get housing completions up to about 50,000 a year would require about 40,000 additional construction employees.

Citing other analysis by the Irish Fiscal Advisory Council, Mr Barrett said if the Government was to complete the entire National Development Plan, “you could be looking at 80,000 additional employees”.

According to the latest labour force survey from the Central Statistics Office, there are about 177,800 people working in construction in Ireland.

“It is simply inconceivable for us, or at least extremely difficult to conceive how such increases in labour can actually be attained over the short run and even the medium run,” he said.

It has led us to be sort of cautious on the overall capacity of the economy to deliver that sort of infrastructural increase in a reasonable period of time.

Mr Barrett said the Government would have to look “very closely at prioritisation across the National Development Plan” and really “sort of think about what are going to be the labour demands at any given point in time”.

In terms of the rest of the economy, the ESRI said it was in a robust state but “notable international and domestic risks are clouding the outlook”, with growing uncertainty “likely to weigh on investment and consumer spending”.

The ESRI is forecasting modified domestic demand — the preferred measure of economic growth — to grow by 2.3% this year and 2.6% next year.

The ESRI makes the assumption the 10% tariff on goods being imported into the US will remain in place and the exemption for pharmaceutical products will continue. If the trade wars with the US intensify, these figures will need to be revised down.

Unemployment is expected to remain low, at just over 4%.

Nominal wage growth is expected to exceed price inflation in both 2025 and 2026, resulting in real wage growth of 3.5% in 2025 and 2.3% in 2026.