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Construction worker shortage could derail ambitious NDP plans

Government unveiled €165bn roadmap last month

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Taoiseach Micheál Martin launched the NDP last month. Photo: Julien Behal Photography/PA Wire

Taoiseach Micheál Martin launched the NDP last month. Photo: Julien Behal Photography/PA Wire

Taoiseach Micheál Martin launched the NDP last month. Photo: Julien Behal Photography/PA Wire

The Government’s ambitious €165bn National Development Plan (NDP) could come under pressure due to a lack of available workers in the construction sector, the Irish Fiscal Advisory Council has warned.

In a report published this morning, the body estimates that as many as 180,000 construction workers could be needed to deliver the plan.

The Department of Finance has estimated that there will be in the region of 78,000 employed in the sector by 2025.

With the construction sector already experiencing a labour shortage as home building accelerates, a lack of workers could put a big strain on delivering NDP 2021-2030, details of which were unveiled by the Government last month.

The Fiscal Advisory Council is a statutory, independent body that assesses official budgetary forecasts and fiscal objectives.

It also warns that the shortage of workers could compound cost overruns that have dogged major infrastructure projects in Ireland. It says that Ireland has a “poor track record” in preventing substantial public investment cost overruns.

“This is true of specific high-profile projects like the National Broadband Plan and the National Children’s Hospital, but it is also visible for general investment plans, which have tended to be revised up systematically in economic upturns,” it says. “Ramping up public investment at the same time as there are shortfalls in construction workers could compound these problems.”

“With its new National Development Plan, the Government now plans to expand public investment significantly,” notes the council.

It says the plan aims to raise public investment to 5.4pc of national income by 2024, then maintain it at that level.

The council pointed out that the rate is “far above” the typical 3pc to 4pc rate seen in other countries that are part of the OECD, the global rich nations’ club.

“Around 180,000 workers would be required in construction to achieve the Government’s planned increases.

“Getting there could be difficult and migration flows may not boost workers as they did in the past,” it said.

“Other countries have narrowed the wage gap with Ireland, but costs remain high such that Ireland’s relative attractiveness has fallen by more than one-third relative to the mid-2000s.”

The council says that the additional investment spending planned by the Government will be funded in part by running higher deficits and comes at a time when Ireland’s debt ratio is already high and needs to be reduced to more prudent levels over time.

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The report today points out that Ireland’s construction sector was about one-fifth below productivity levels in the UK in 2019 and 29pc below the euro area.

It was about 44pc below the average for the top five most productive countries.

“Closing a gap of that size over 10 years would require Ireland’s construction sector to grow its productivity by at least 6pc annually on average,” the report says.

“By contrast, the last two-and-a-half decades have seen productivity growth average just 0.7pc annually in the sector.”

Climate action projects are a major aspect of the NDP, which also plans to accelerate the delivery of social and affordable housing. 


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