Employment boost from data centres 'relatively limited'

Dept of Finance notes recent surge in investment in data centres

Investment in data centres in Ireland will have a “relatively limited impact” on employment here and its figures should be “interpreted with caution as indicators of domestic activity”, the Department of Finance has said.

Investment in data centres in Ireland will have a “relatively limited impact” on employment here and its figures should be “interpreted with caution as indicators of domestic activity”, the Department of Finance has said.

In its latest economic insights bulletin, the Department singled out high-tech investments in data centres and hardware associated with AI, with recent data pointing to a surge in investment in the latter half of 2025 that seems to be associated with data centres.

“Looking forward, despite infrastructure constraints evidence suggests that there continues to be a pipeline of new data centre activity that may sustain further investment,” it said.

The Department of Finance said in its note that AI is widely touted as a potentially trasnformative technology that will have profound impacts on the economy, labour markets, and society.

The demand for computing power to meet the challenge has meant that there have been “macroeconomically significant levels” of AI infrastructure investment.

Digging into trade data, it said that there has been a significant increase in imports of AI-related goods from the second half of 2025 onwards into the first quarter of this year.

“This surge in imports is consistent with the pick-up in modified machinery and equipment seen in the final quarter of last year and would point towards the fitting out of new data centres or the upgrading of existing data centres present in Ireland,” it said.

“As an economy with a small domestic market for [AI and computer] services, it is reasonable to assume that this investment in computing power will see a corresponding increase in exports of computer services.” 

It noted that the outlook for further investment in data centres in Ireland is somewhat uncertain. Previous policy positions had restricted new data centre activity in Ireland, although the Government has signalled its support for data centre expansion with new policies in this area.

In the short-term, it said there appears to be a continued pipeline of investment in data centres in Ireland with a “number of large data centre projects having commenced in recent quarters”.

“While investment in data centres reflects physical additions to Ireland’s capital stock, much of this capital is likely to have been imported while its direct impact on employment is expected to be relatively limited,” the department said.

“If even bespoke measures of the Irish economy, like modified domestic demand, are heavily influenced by a single industry which may be extremely capital intensive and has relatively little connection to the wider economy or labour market, then they should be interpreted with caution as indicators of domestic activity.” 

In a separate note in its latest economic insights publication, the Department of Finance looked at Ireland’s aging population and what other countries have tried to do to boost birth rates.

It said other countries have lessons to offer about steps they have taken to try to encourage boost declining fertility rates, such as Japan and Poland.

“Even Nordic societies who have been at the frontier of promoting such programmes including generous parental leave, childcare, and cash benefits have experienced declining birth rates with a rising average age for first-time parents,” it said.

“This suggests that there are likely deeper societal and cultural shifts at play leading people to delay parenthood or desire fewer children, even in the presence of generous support.”