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More construction workers needed to ease housing crisis, economic watchdog warns

Increase in labour, plus faster adoption of modern building methods, vital as crisis constrains Irish economy, NCPC says

As of the fourth quarter of 2023, there were 27,500 migrant workers in Ireland’s construction sector, an increase of 84 per cent compared to the second quarter of 2021. Photograph: iStock

Laura Slattery
Fri May 10 2024 - 06:00

The State needs to attract more construction workers if housebuilding targets are to be met, an economic watchdog has warned, as it said the housing crisis was “inhibiting Ireland’s competitiveness performance” and undermining growth and wellbeing.

The National Competitiveness and Productivity Council (NCPC) said a rise in employment permits for workers from outside the European Economic Area (EEA) was “part of the solution” to increasing labour supply and key skills in the short term.

However, the pressure this itself would place on an already over-constrained housing market as well as the “reality” of the competition that the State faces for the supply of migrant labour means it should not be the only solution, it added.

The council, chaired by Dr Frances Ruane, said the State should also “ramp up the adoption” of more modern building methods and “engage more of our domestic workforce” in the construction sector.

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Its new bulletin on the sector, which employed 161,300 people as of the end of 2023, outlines how easing labour constraints will be “crucial” in order to make housing shortages less of a drag on the competitiveness of the Irish economy.

The number of employees in the construction sector has more than doubled since 2013 and has also risen by 14 per cent in just the past two years, its bulletin notes. But so sharp was the initial decline in construction sector employment following the global financial crisis and Irish property market crash, there were still 29 per cent fewer construction workers in 2023 when compared to 2006.

“Construction is one of the few examples of a sector that has not expanded – in terms of numbers employed – since 2001. Given the recent population growth rate, this suggests an obvious question: is this sector simply too small to meet the current demand for housing?” ask the bulletin’s authors, Dr Dermot P Coates, Karen Hogan and Erika Valiukaite in the NCPC secretariat.

Greater adoption of modern methods of construction (MMC) would reduce pressures for labour demand in the sector, the council recommends. These include techniques such as off-site manufacturing and digital data management processes that can accelerate the pace of construction and enhance efficiency and quality control. The bulletin also highlights a number of possible education and training initiatives.

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As of the fourth quarter of 2023, there were 27,500 migrant workers in Ireland’s construction sector, an increase of 84 per cent – or 12,600 workers – compared to the second quarter of 2021.

In October 2021, changes were made to the State’s employment permits system that helped attract construction workers from outside the EEA, with workers arriving from countries such as Brazil, India, Philippines, South Africa and China. In 2021, some 607 permits for construction-specific occupations were issued, with this rising to 1,349 last year.

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However, this remains a “very small” proportion – just 0.8 per cent – of the total number of people employed in the construction sector last year, the council noted.

The bulletin authors also said the State should “consider how best to deploy our labour supply”, suggesting that further steps be taken to ensure that the sector can “strike the optimal balance” between commercial and residential construction.

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics

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