Ireland | Srinivas Raghavendra

Full Employment, Skills Shortage, No Bargaining Power

Thu, 30 Jul 2026 00:00:00 +0000

Ireland is, on paper, at full employment. Unemployment sits near 4.8 per cent. That fact has turned into a sales pitch at student recruitment fairs in Delhi or Bangalore- Ireland as a booming tech hub, a gateway to Europe. Thousands of non-EU students buy it every year. For many, the reality that follows is more precarious, and the fallout doesn’t stop with them.

Ireland’s ICT, engineering and healthcare sectors report persistent, serious skills shortages. Basic economics says a shortage that severe should push wages up. For graduates, it hasn’t. The mean starting salary for a technology graduate was €31,701 in 2019/2020; today it’s around €34,500. Over five years, that’s roughly 9 per cent nominal growth, against cumulative Irish inflation of somewhere between 20 and 25 per cent. In real terms, today’s graduate is worse paid than one who started before the shortage was ever called critical.

AI complicates this further, though it doesn’t explain the pattern away. ICT employment for under-25s fell 20 per cent between 2023 and 2025, even while roles for older staff kept growing. The drop hit hardest where entry-level, repeatable work used to sit. What counts as a “critical shortage” now is increasingly senior AI specialists rather than junior developers. Yet the visa pipeline keeps admitting graduates into that same shrinking entry-level category, with even less mobility than they had before.

Senior salaries in the same sectors keep climbing, because experienced workers with mobility can bargain. Graduates mostly can’t. Their right to remain in Ireland is tied by law to the employer sponsoring them, which is exactly why they’re the ones recruited to fill the shortage in the first place. Tied to one employer, they have no room to push back.

Non-EU graduates get up to two years here on the Stamp 1G graduate visa. After that, staying means finding a sponsor, and keeping them. Lose the job, and the residency goes too. Multiply that across every graduating cohort and something bigger emerges, a continuously replenished pool of skilled labour that never runs short. Universities enrol and graduate new international students every year, so a new cohort enters the visa system before the last one runs out.

The rules have had every chance to catch up. The legal floor for what a sponsored graduate can be paid, €36,605 for General Employment Permits, €40,904 for Critical Skills Permits, sat almost untouched from 2014 until this March. Median wages kept moving: CSO figures show median annual earnings rose 3.7 per cent in 2023-24 alone. For a graduate with no salary history and no rival offer to point to, that frozen number doesn’t read as a legal minimum. It reads as their market price.

Put the frozen floor and the endless pool together and you get something close to Marx’s reserve army of labour. Only this one isn’t built from unemployment. It’s built from an economy already at full employment, and it doesn’t need joblessness to work, just a pipeline that grows faster than the floor catches up. Employers know it. The leverage has nothing to do with anyone’s scarce skills.

The leverage from that ever-growing pool gives employers headroom. They don’t have to bid up pay to compete for staff, and that drags down what everyone doing the same job beside them can command too, not just non-EU graduates. It disciplines quietly. There’s no negotiation to interrupt, because there was never a negotiation to begin with.

This arrangement looks like a win for almost everyone, except the workers. Employers get a steady, low-cost talent pipeline. Immigration policy becomes one of the mechanisms propping up a growth model built on staying cost-competitive for foreign investment. Which is the paradox underneath the paradox: a system built to plug a skills shortage ends up a win for everyone running it, and a loss for everyone inside it. It corrodes the household spending a domestic economy actually runs on.

None of this requires fewer graduates. It requires fixing the system that governs them. First, index the pay floor to earnings automatically, as Germany already does with its Blue Card; that’s not a wage subsidy in reverse. It only removes the discount employers receive for hiring someone who can’t walk away. Second, let the permit move with the worker instead of tying the worker to one employer, following the same logic as mobile number portability. And third, give graduates a job-seeker window that matches how long it actually takes to find sponsored work: Britain already offers a flat two years, no job offer required, versus Ireland’s tiered twelve-to-twenty-four months.

Universities have no reason to see this as their problem. Fuller courses mean more fee income and a stronger position in the rankings. Employers have no reason to see it either, a workforce that never has to be bid up just reads as efficiency, not risk. Each is simply responding rationally to its own incentives, winning on its own terms. None of them can see what they’re building together.

Ireland’s knowledge economy runs on human capital. It can no longer see itself devaluing the very capital it depends on. What looks efficient at the level of any single firm or university adds up to something fragile at the level of the whole economy, one with nothing left to absorb the next shock. The fragility isn’t concealed by anyone. It’s invisible because no actor in the system is positioned to see past its own balance sheet. By the time it shows up in the aggregate numbers, every choice that produced it will have looked, individually, like a rational one.

A €9 Billion Windfall and the Dilemmas of a Dual Economy

Wed, 01 Apr 2026 00:00:00 +0000

History offers two paths for countries with windfalls. Some saved them as buffers and watched their structural problems persist. The UK’s North Sea revenues and Italy’s 1990s windfalls stabilized the public finances but left domestic competitiveness unchanged. Others used their surpluses to reshape their economies. Norway used its oil revenues to build long-term productive capacity; Denmark channeled fiscal space into childcare and energy systems that lowered costs for households and firms; Singapore invested in housing and infrastructure, and South Korea invested to make its domestic economy competitive.

The Government must decide which path to take. That is the dilemma posed by a €9 billion windfall generated in a dual economy. The answer depends on whether it wants to keep the public finances sound while reinforcing the divide, or begin to unwind it.

The familiar instinct is to save it and protect the public finances when the cycle turns. It is fiscally cautious, and caution has served Ireland well. But caution is not a strategy. Because the pressures facing Ireland’s domestic economy are not cyclical. They are structural.

The multinational sector operates at productivity and profitability levels entirely disconnected from the domestic economy. The productivity gap has remained between six-to-one and eight-to-one for years. This gap matters because the multinational sector’s productivity inflates GDP, drives the fiscal surplus, and shapes the price level. But it does not set wages for most workers. More than four-fifths of the labor force works in domestic sectors, where real wages have been flat or falling. The result is a two-speed economy: one track generating the surplus, the other absorbing the pressure the surplus conceals.

In this two-speed economy, the high-productivity multinational sector effectively sets the cost base for housing, energy, childcare, transport, and insurance that lower-productivity domestic firms and households must absorb. The multinational sector does not set these prices directly; rather, through higher wages, stronger demand, and pressure on scarce resources, it drives up the structural costs borne by the rest of the economy.

The consequences are visible in the economy. Housing costs are now so high that domestic employers struggle to attract and retain staff. Childcare costs absorb a second income in many households, reducing labor-force participation and increasing wage demands. Energy costs, even after the recent ceasefire, remain volatile and disproportionately burdensome for small firms. Transport bottlenecks increase commuting times and business costs. Domestic-violence services, a core part of the social infrastructure, remain under-resourced and overstretched. These are not “social extras.” They are economic inputs. When they are expensive or unreliable, the domestic economy pays the price.

During the eurozone crisis, countries were forced into internal devaluation, cutting wages and structural costs to remain competitive. Ireland now experiences a domestic version of the same logic. The multinational sector sets the cost structure; the domestic sector adjusts to it by squeezing wages, eroding margins, and deferring investment. This is internal devaluation within a dual economy.

This is the core of the problem: one economy generates the surplus; the other absorbs the pressure that surplus conceals. That mismatch, notwithstanding the Middle East crisis, squeezes household budgets, suppresses demand, and leaves domestic-facing firms operating on margins too tight to invest. The fuel protests were an early expression of this tension.

This is why the fiscal stance matters. Saving the windfall is not wrong. But saving, without a structural strategy, leaves the domestic economy exposed to the very forces that make the windfall unstable. A dual economy requires a dual-track fiscal design. One track should continue to manage cyclical risk, as the Rainy Day Fund does. The other should address structural risk, namely the persistent gap between domestic productivity and the cost base.

That second track requires a dedicated, strategic structural fund, ring-fenced from day-to-day spending and focused on long-term investment in the foundations of domestic competitiveness. Housing supply, childcare capacity, energy infrastructure, public transport, and domestic-violence services are not residual fiscal afterthoughts. They underpin the domestic economy’s productivity and competitiveness. If they remain expensive, the domestic sector will continue to absorb adjustment pressures and reinforce the dual economy, regardless of how large the fiscal surplus becomes.

The government has a choice. It can save the windfall and leave the domestic economy competing with a cost base it cannot influence. Or it can invest in the structural and social infrastructure that lifts domestic productivity and expands the domestic sector’s capacity to absorb demand. The first option locks in the two-speed economy that makes the windfall so precarious. The second strengthens the part of the economy that determines long-run resilience.