Skills shortage driving construction wage surge

The Irish construction sector is grappling with intensifying wage pressures as a persistent shortage of skilled labour collides with rising housing demand. Buildcost director Liam Langan has warned that salaries are climbing at a pace that risks reshaping the industry’s economics.

Employment in construction currently stands at 170,000, far below the 237,000 peak during the Celtic Tiger. The shortage has been exacerbated by a recent sectoral employment order, which increased pay for trades, operatives and apprentices by 3.4 per cent. With labour making up as much as 40 per cent of total construction costs, even small wage hikes are feeding directly into project budgets.

The Economic and Social Research Institute has cautioned that overheating in construction is already evident, with average hourly earnings up 10 per cent year-on-year in Q2 2025. This threatens the Government’s ambition to deliver 303,000 homes by 2030, as both housing and infrastructure delivery face mounting cost pressures.

Tender price inflation, once dominated by energy and material costs, is now driven largely by labour. For developers, margins are tightening. For local authorities, fixed budgets could translate into fewer homes built. The knock-on effect may see taxpayers asked to shoulder higher subsidies or buyers facing escalating prices.

Langan argues that expanding apprenticeship programmes in trades such as electrical, mechanical and carpentry is essential to restoring balance. Without intervention, Ireland risks entering a cycle where rising wages feed directly into constrained housing delivery.

Explore the full analysis to understand how these dynamics could reshape the sector’s future. Read here.