Permits won’t solve builder labour shortage, says NCPC

Ireland needs to “ramp up” use of modern construction methods, and deploy more domestic workers, in order to tackle the labour shortage in the construction sector, according to the National Competitiveness and Productivity Council (NCPC).

In its latest bulletin the council, which makes recommendations to the Government, says the employment permit system is only part of the solution in getting enough workers in order to reach our housing targets.

Use of employment permits only “increases pressures on our already over-constrained housing market”, the NCPC points out, and Ireland is competing with other countries which are also experiencing a severe shortage of construction workers.

“In the longer-term, it is therefore critical that we also increase emphasis on other solutions, such as ramping up the adoption of Modern Methods of Construction (MMC) and engaging more of our domestic workforce in construction.”

MMC, which includes offsite construction techniques such as factory assembly, can speed up the delivery of projects by between 20pc and 60pc. The Government should also consider how best to deploy existing workers, and find the right balance between residential versus commercial building, and between constructing new dwellings and retrofitting.

“Ireland’s labour market is very tight, acting as a constraint on our ability to meet housing targets,” the council’s bulletin says.

In the last quarter of 2023, construction’s share of total employment was just over 6pc, which means it is one of the few sectors with fewer employees now than it had during the Celtic Tiger era, even though the population and labour force are much larger now.

While the number of construction workers has more than doubled since 2013, such was the initial decline following the financial crash that there are still 29pc fewer now than in 2006.

Occupational groups that relate to the construction sector, such as skilled trades, have also seen a decline since the crash.

“Construction is one of the few examples of a sector that has not expanded – in terms of numbers employed – since 2001,” the NCPC says. “Given the recent population growth rate, this suggests an obvious question: is this sector simply too small to meet the current demand for housing?”