The hugely ambitious National Development Plan proposes an investment of around €275 billion to deliver transformative changes to Ireland’s infrastructure between now and 2040. The plan has a number of key strategic priority areas, including housing, urban development, transport, water, climate action, skills and enterprise development.
However, as the plan involves a significant amount of building activity, delivery will depend on the capacity of the construction industry to rise to the challenge. The Economic and Social Research Institute (ESRI) has highlighted a significant labour shortage in Ireland’s construction sector. The organisation estimates that an additional 80,000 construction and infrastructure workers will be needed to complete National Development Plan projects and deliver on its target of 50,000 new homes annually.
The Construction Industry Federation (CIF), on the other hand, claims workforce capacity is not a significant limiting factor in infrastructure delivery. So, who’s correct?
David Cox runs Turnua, a company that supplies critical infrastructure across sectors such as healthcare, telecoms and data communications. He feels that the answer to the question above lies somewhere in the middle.
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“Ireland’s construction sector faces a real skills challenge, but it’s not as simple as just needing 80,000 more people,” he says. “We see shortages in specialist trades engineers, fibre technicians, and M&E [mechanical and electrical] professionals, the kinds of roles essential for both housing and national infrastructure. That doesn’t mean the NDP can’t be delivered. But if we rely on yesterday’s model of construction, we’ll fall short. The opportunity is to build smarter, not just bigger.”
Cox says the solution involves a multifaceted approach including reviving and valuing apprenticeships alongside higher education, embracing methods such as modular construction, using digital and AI tools to reduce waste and speed delivery, attracting and retaining specialist talent from home and abroad, and fixing planning delays and procurement bottlenecks.
“Skills are critical, but they are only one piece of the puzzle. Even with more people, projects won’t move if planning and procurement block progress. Policymakers must work hand in hand with industry, giving us a predictable pipeline of projects, incentivising innovation and valuing apprenticeships equally with higher education,” he adds.
While the ESRI emphasises the labour shortage challenge, the CIF claims that workforce capacity is not the primary barrier. Instead, the organisation identifies bureaucratic hurdles, planning delays and financial constraints as more significant obstacles to progress, urging streamlined policies and agile decision making.
One obvious area in which extra labour could be sourced lies within the sector reshoring some of its existing export activity.
According to the CIF, 62 per cent of the 50 largest construction companies in its membership have reported exporting Irish construction activities to international markets, a trend that it says is set to increase. The Irish construction sector has established itself as a major European exporter, with the top 50 contractors recording €8.33 billion in foreign turnover in 2024, and activity spanning multiple European markets and specialised sectors, particularly data centres, life sciences and advanced manufacturing facilities.
The CIF has produced a policy paper on industry capacity which maintains that the sector has the capacity to deliver on national housing and infrastructure targets. The problem, it says, is not labour shortage but rather what it calls “persistent systemic bottlenecks” including planning delays, legal challenges and insufficient public investment, which are stalling projects and causing companies to redirect resources abroad.
The construction industry has demonstrated its capacity to scale up rapidly when the conditions allow. It notes, for example, that between 2012 and 2023 housing completions rose by 570 per cent, civil engineering output increased by 56 per cent and non-residential construction by 98 per cent.
Looking specifically at labour numbers, the CIF believes there is a misalignment in workforce projections, with traditional labour market studies often overestimating needs. For example, a 2019 study forecast that 212,700 employees would be required by the sector by 2020, a significant overestimate, while a report earlier his year showed that increased housing output was achieved with a modest employment increase.
Liam Kenny, managing director of John Paul Construction, which has delivered key infrastructure projects in Ireland for more than 75 years, says that while the NDP is very welcome in its overall scope and ambition, the lack of detail in the plan is hampering allocation of resources, including human resources.
“There’s very little detail in it, apart from the Metro. Previous NDPs have spelt out specific projects in areas such as roads and healthcare etc. Until we see that detail, it is very difficult for a contractor to invest in resources for projects that may or may not come and we don’t have a timeline.”
Like many Irish construction companies, John Paul Construction has looked abroad to fuel some of its growth in recent years.
From a labour perspective, Kenny says there no big headlines about specific projects starting in this country that would attract labour here, but he feels that this would not be problem when projects come on stream.
“The ESRI may well be technically correct at the moment in their analysis but from a contractor’s point of view, we build major projects in Ireland and Europe, and we’ve never failed to build a project because of lack of labour. We’re always able to resource projects when we know what we have ahead of us.”
Another factor that will help in delivering elements of the NDP is that the same resource levels that were required for a project 20 years ago are not required now, he adds. By way of example, he cites one of John Paul Construction’s current projects, a large residential scheme in the East Wall area of Dublin. He estimates that the labour component on site here is around 150 workers less than it would previously have been, and that savings of 15-20 per cent on staffing are common now because frames, windows and other elements of a build are now manufactured off-site, which also increases quality and reduces build time.
James Delahunt, partner, corporate finance, and head of energy and natural resource at KPMG Ireland, says it is important to drill down into the various reasons for why a labour shortage exists currently and to take positive steps to address these.
“It is critical to accurately diagnose the root cause of the labour shortages, differentiating between gaps in skilled workers and inefficiencies in using existing talent. If an influx of workers is required, strategies like enhancing education and training programmes, incentivising the return of Irish workers from abroad and attracting skilled immigrants are required,” he says.
There are many initiatives currently in place such as Springboard+ which provides free or heavily subsidised higher education courses for unemployed people, or the European Social Fund Plus 2021-2027, allocating €1.08 billion for investment across upskilling, reskilling and lifelong learning for disadvantaged communities, he points out.
“It is imperative that we continue to emphasise resourcing as a hurdle to the workforce challenges. Developing robust trade education, including the expansion of the national apprenticeship system, will also create a steady supply of well-trained professionals skilled in modern construction technologies and sustainable practices.”
If the current slowdown in the industry proves enduring, labour capacity may not be as much of a problem as the ESRI has predicted. Construction associated with foreign direct investment, for example, has fallen sharply over the past 12 months, reflecting recent global economic and political uncertainty, while other sectors of the industry have also seen demand fall.
The latest AIB Construction Purchasing Managers’ Index of Construction Activity fell again in August, with builders reporting a reduction in new business and output falling across the housing, commercial and civil engineering sectors.
For the first time in 18 months, all three categories of construction saw a drop in activity. The headline index was below the key break-even level of 50 for the fourth successive month and the August figure of 45.9 was also lower than the 47.1 level recorded in July, indicating an accelerating fall in construction activity.
Capacity may not be such an impediment to NDP delivery after all.
