Almost 80,000 additional workers are potentially needed to address Ireland’s infrastructure deficits, “mainly to build new housing and retrofit existing home”, according to a new report from the Irish Fiscal Advisory Council.
The research highlights a huge shortfall in essential labour across the housing, healthcare, transport and energy sectors, and says that unless systemic issues including long-standing planning problems are addressed, the State will struggle to close the infrastructural gap between Ireland and other high-income countries in Europe.
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While some additional State investment may be required, the report suggests the amount would be “modest relative to overall government spending”.
One of the biggest barriers to the timely delivery of infrastructure projects has been the planning and objection system with its “slow and unpredictable nature” leading to higher costs and longer delays, the report suggests.
The number of construction workers needed to tackle the housing shortage and other infrastructural shortcomings could be slashed to fewer than 20,000 by improving value for money and productivity, it added.
Ireland underperforms many other European countries in terms of productivity in the construction sector, the report’s lead author Niall Conroy said.
The Republic’s infrastructure deficits “are long-standing issues which cannot be resolved overnight. They require a planned, multiyear approach,” he said.
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He pointed out that Ireland “already spends a high amount on public investment relative to the size of its economy. The challenge is sustaining this and getting better value for money.
“Historically we’ve got a pretty low amount of output per construction worker and if the sector became more productive [and there was] more output from each person that’s working, you would need less extra people to deliver the infrastructure that we require,” he told The Irish Times.
He noted that productivity per worker in construction is about 30 per cent below the average in other European countries and while he stressed it was not the fault of the individual workers it did point to systemic problems.
“If you could make the construction sector more productive or more efficient then you wouldn’t need so many people to deliver these extra projects. After the financial crisis, the construction sector basically collapsed [and] lots of the firms were reluctant to invest in new technology or machinery so you don’t have some of the modern construction methods you see in other countries.”
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He cited the example of modular housing and off-site construction that routinely happens in other countries and pointed to an Irish construction sector which is “populated by loads of small firms” with only a small number of large companies working on housing projects.
Mr Conroy said that typically small firms have lower productivity levels and less innovation so “naturally it’s going to be a bit less productive than [countries] where they tend to have more large firms working on [housing projects]”.
He also highlighted long-standing delays in the planning process with even fast-tracked, large-scale infrastructure projects taking almost a year to go through the process after which they face judicial reviews and other delays.
“That adds to the cost and adds uncertainty and it makes it slower and more costly to deliver,” he said.
He suggested that, from a policy perspective, reforms of the planning system could speed the processes up and “allow people to make the sort of investments that they need to make and make it a lot quicker and a lot cheaper to deliver a lot of infrastructure that we need”.
He also said that if there was “less boom and bust” in the Irish economic cycle then it would be easier to attract better and more efficient investment in the construction sector.
