While more people than ever are in work, rising unemployment in shrinking sectors and deepening skills shortages are reshaping the labour market. Almost 2.8 million people are in work in the State, an increase of almost one million in a little over a decade. With the economy at near full employment and employers in almost every sector reporting talent and skills shortages, this should be a golden era for job candidates.
CSO statistics for 2025 confirm record numbers in employment, says Cathy Balfe, career coach at Career Coach Me. “However, the numbers unemployed also increased by more than 25,000 over the 12-month period. This apparent contradiction is due to increasing numbers of people aged 15-plus in total in the labour market, either working or looking for work.
“This increase in unemployed workers has led to an increase in the unemployment rate, which currently stands at 5.3 per cent. This is the highest unemployment rate since 2021.”
There are several industries that have contracted, with fewer individuals in employment in these industries compared to 12 months ago, says Balfe. “Collective redundancies have been reported in the news in 2025, particularly in the IT sector – including at Salesforce, Microsoft, Amazon and Intel. High levels of redundancies in contracting sectors have led to some individuals struggling to be rehired.
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“So, despite the high numbers of people in work, others might be struggling to find opportunities, particularly in industries that have contracted recently. The labour market has been evolving rapidly over the past few years, with impacts from Covid, global uncertainty and war, changing international tariffs, inflation and higher interest rates. How labour market conditions evolve over 2026 will depend on many of these factors.”
Skillnet Ireland’s 2025 Ireland’s Talent Landscape Report highlights persistent shortages across digital technology, engineering and skilled trades, life sciences and healthcare, and the green transformation sectors, says Laura Flynn, head of people consulting at EY.
“EY’s 2025 Mobility Reimagined research reinforces this, with findings showing 74 per cent of employers find it takes over a year to recruit for senior positions, and 48 per cent face difficulty sourcing the talent they need.
“In tandem, the skills gap is widening. A recent survey reports 70 per cent of employers urgently need talent with new skills to meet emerging business needs, drive enhanced performance and unlock value, with rising demand for AI literacy, data fluency and critical thinking. Candidates who can adapt, learn quickly and move across roles will be best positioned to benefit.”
There are national and industry-wide initiatives to try to address skills shortages, says Balfe. “For example, the highly successful Springboard+ programme that has been running since 2011 aims to upskill and reskill candidates in areas of high skill demand.
“These courses are highly subsidised or free, and most are delivered flexibly and on a part-time basis so people can be working and learning at the same time. Talent managers could identify suitable courses for employees to encourage the development of required skills internally.”
Another initiative is the Skillnet Business Networks (there are 70 nationwide) that aim to partner with industry and provide subsidised upskilling and reskilling programmes in line with industry needs, Balfe explains. “Talent managers can reach out to industry-aligned Skillnets to discuss their training needs and explore suitable programmes.
“For example, there are six Skillnets in the digital/technology sector, all of which offer subsidised training programmes aligned to areas of skill need identified through industry collaboration.”
Organisations need to respond to these challenges by rethinking their talent strategy, says Flynn. “EY’s Work Reimagined 2025 shows 88 per cent of employees now use AI at work, yet many companies are missing productivity gains because talent systems and technology aren’t integrated. Only 32 per cent of employers have the people capabilities needed to build what at EY we define as the ‘talent advantage’, highlighting the need for upskilling, internal mobility and flexible work models.
“Career pathways are also shifting, with organisations moving toward skills-based hiring, apprenticeships, micro-credentials and internal talent marketplaces to widen access and reduce reliance on traditional qualifications.”
Organisations should develop a clear view of their future skill needs, and understand which needs are going to be hardest to fill due to anticipated skill shortages, says Balfe. “Some skill shortages can be met through building skills – by developing existing staff through upskilling programmes or through hiring and investing in graduates, for example.
“Other skills shortages might be best met through hiring contractors – if the skills are only needed for a temporary period the higher daily rate of contractors might offset the cost of upskilling and training existing staff. Finally, talent managers might try and compete in the labour market for highly skilled employees – offering attractive salaries and benefits in what is a jobseekers’ market.”
Retention now matters as much as attraction, says Flynn. “Employees are staying where they see growth, flexibility, meaningful culture and personalised rewards. In a labour market defined by choice for candidates and pressure for employers, the organisations that build fair, future-fit talent systems will be the ones that secure and keep the skills that will drive organisational growth.”
