Alan Healy: Ireland has Europe's smartest workforce but we are running out of smart jobs

By numbers, we are the most educated country in Europe, but with research showing a large number of graduates doing work that does not require degrees, it is time to rethink where the skilled jobs really are

Two-thirds of 25- to 34-year-olds hold a third-level qualification, the highest rate in the EU.

For the past half century, a repeated pattern has emerged when a large company establishes a presence in Ireland.

Along with the low taxes, the pro-business environment and access to Europe, companies always pointed to Ireland's "well-educated" and English-speaking workforce as a reason for establishing a presence here. 

The phrase was so often repeated it is a wonder the IDA didn't copyright it. To this day, other countries continue to emulate our economic model and chief among their priorities is ensuring they can supply workers to meet the demand of multinationals and foreign investors.

Placing a premium on education was and is something to be proud of. Despite significant levels of poverty and disadvantage throughout large parts of 20th-century Ireland, education remains a mainstay of Irish life and served us well when the multinationals came calling.

Ireland is, by the numbers, the most educated country in Europe, with 65% of 25- to 34-year-olds holding a third-level qualification, the highest rate in the EU. The country also produces more Stem graduates per head of population than any other member state. 

But nothing lasts forever, and scratching the surface of our graduate republic reveals an awkward reality. An enormous number of these graduates are not doing graduate work at all.

Research by Ciarán Nugent of economic research organisation Neri found that in 2019, almost three in 10 workers with third-level qualifications were working in jobs that did not require them. Separate ESRI research has repeatedly placed Ireland at or near the top of the EU league for overeducation, with about a third of the entire workforce holding more qualifications than their job demands.

Of course, education and academia are not just about employment, and they never should be. Advanced education, research, scientific endeavour, and artistic appreciation are all essential for human progress. 

Also, personal choice and circumstances will always vary and then dictate where a person ends up in employment. But the high level of overqualification in Ireland suggests there remains a belief that holding degrees and PhDs is the ultimate gateway to success.

But this is all changing.

The Department of Finance's new Future Forty paper, In Short Supply, published this week, projects Ireland's labour force will peak in the mid-2030s and then contract as the population ages. 

Demand for workers in healthcare and construction could reach roughly double the available supply by 2065. If those essential sectors are prioritised, the department estimates the labour available to the rest of the economy could be more than 20% lower by 2065.

In a country where a scarcity of workers is growing more acute, a degree that is not used is no longer just a personal issue but a policy one.

The department's answer is skills-matching: move the overqualified out of transport, hospitality and retail and into the "high-value" sectors such as finance, professional services, and ICT, which have low overqualification rates, high wages, and room to absorb them. 

Exposure to AI

On paper, this makes some sense, but it does not take into account an important variable in modern life, AI.

In 2024, the Department of Finance and the Department of Enterprise jointly published Artificial Intelligence: Friend or Foe, which mapped AI exposure across the Irish labour market. Its findings sit very uneasily beside the new paper. 

Ireland's workforce is more exposed to AI than the advanced-economy average. About 30% of employment is in occupations where AI could substitute for labour rather than complement it. 

And the most exposed sectors of all? Financial and insurance activities, and information and communications, with 94% of ICT workers in highly exposed occupations. The at-risk roles it named read like a graduate careers fair: accountants, laboratory technicians, IT operations technicians.

Just this week, Microsoft joined the other tech giants in announcing another round of job cuts, with Irish workers included in the target list, as it shifts investment towards AI.

So one arm of the department proposes funnelling Ireland's surplus graduates into precisely the sectors another arm has flagged as most substitutable by machines.

This brings us to an uncomfortable thought. Ireland's future labour-force problem may not simply be overqualified workers in the wrong sectors. It may be that our definition of "high-value" work is going stale, and faster than official projections can accommodate.

To its credit, the department is edging towards the same conclusion: In Short Supply suggests policy may need to shift from measuring the quantity of jobs created to their quality and societal value.

It seems the future of Ireland's human capital is in more physical, interpersonal and essential jobs that AI cannot easily reach.