Ireland faces “very negative” economic consequences within the next 25 years if inward migration is not encouraged as the workforce approaches retirement.
That is the key takeaway from a new department of finance discussion paper, which predicts Ireland’s population will reach between 6m and 7.6m by 2065.
The paper, the first in a series to be published alongside next month’s Budget, models future demographics and warns that if migration falls to net zero by 2035, the labour force will begin contracting from that point.
“The economic consequences of such a fall would potentially be very negative — posing major challenges for Ireland’s enterprise base, diminishing the capacity of the State to provide public services, and ultimately reducing living standards as a shrinking labour market constrains economic growth,” the paper states.
“Migration appears to be the sole driver of labour force growth in the long run,” it adds.
In the central projection, net migration remains between 35,000 and 40,000 annually until 2065, pushing the population to 6.8m, compared with 5.2m today, while the labour force starts to contract from 2047.
As the workforce shrinks, Ireland’s health and pension systems will face increasing strain, with fewer younger workers paying the taxes needed to support them.
Key to the issue is Ireland’s declining fertility rate, which has fallen from nearly three children per woman 60 years ago to just 1.6 in 2022. A fertility rate of 2.1 is needed to keep a population stable.
The Department does not expect the fertility rate to rise, describing such a development as prohibitively unlikely.
This trend mirrors other developed nations, meaning countries will be competing to attract inward migration.
Another concern is the high emigration rate among critical skills permit holders, with more than 60% leaving Ireland again within five years, creating major skills gaps.
Currently, the largest driver of positive net migration is family reunification, while international protection applicants represent the second-lowest group, just above arrivals from the UK.