Ireland's overqualified workers will need to be diverted to other sectors — Department of Finance

Demand for workers in healthcare and construction could reach double the available supply by 2065 unless labour is diverted from other parts of the economy.

Redistributing Ireland's overqualified workers to more suitable roles could help alleviate future demand for workers, a new Government study has found.

A new paper published by the Department of Finance says demand for workers in healthcare and construction could reach double the available supply by 2065 unless labour is diverted from other parts of the economy.

The stark projection is contained in a new paper, In Short Supply: Ireland's Workforce to 2065. It warns Ireland's ageing population means growth in the labour force will continue to slow down, peaking in the mid-2030s and then contracting to below 50% by 2065. It said increased net migration or fertility rates may help, but only at the margins.

As the country's population gets older, demand for workers in human health and social work is likely to significantly exceed supply over the next four decades. 

For construction, the gap is projected to grow particularly quickly in the coming decade due to the level of construction required to deliver on housing and infrastructure. 

Education, by contrast, would have an excess supply based on current trends, as the number of children and young people in Ireland falls.

With labour having to be prioritised in certain essential sectors, the study suggests this could have significant implications for the rest of the economy. If workers are channelled into health, social care, and construction to meet demand, the department estimates the labour available to the rest of the economy could be more than 20% lower by 2065, with the supply of workers for other sectors starting to shrink from the mid-2040s.

The department study suggests some gains could be made by better distributing workers based on their qualifications, noting a "significant share of tertiary-educated individuals are overqualified for the role they perform."

The paper suggests policymakers may need to consider "explicit prioritisation" of where workers are allocated across the economy, a departure from the long-standing assumption that market forces alone should balance labour supply and demand.

Such a redistribution would benefit high-value sectors such as financial, insurance, real estate, science and manufacturing activities and could absorb tertiary-educated workers from other sectors. 

However, sectors such as transport and storage and accommodation and food services would suffer, due to the significant share of those sectors’ current workforce being overqualified, as well as a lack of "less-educated workers to replace them".

"Policy must focus on preparing university graduates for roles in sectors which fully utilise their skills, as well as assisting those seeking to move into growing high-value sectors by providing opportunities to upskill or reskill throughout their life," the study states.

"In the Irish context, offshore wind development is an example where many workers have adjacent qualifications, therefore with a short targeted skills option, they may be enabled to enter new roles more easily. This approach will ensure that Ireland can fully reap the productivity benefits from having an exceptionally well-educated population."