Figures from the Employment and Recruitment Federation of Ireland (ERF) Irish Labour Market Monitor for Q2 2026 have revealed the construction, industry and transport sectors added 56,500 roles in a year while high tech and labour-intensive services shed 71,000 between them. Moreover, the report shows clearly how employers are pushing new hiring into contract rather than permanent.
This seems to suggest that Ireland now has a two-speed labour market, with employers hedging their way through it, according to the ERF.
CSO data cited in the report shows employment in construction, industry and transport rose by 56,500 in the year to Q1 2026. Over the same period the high-tech services sectors lost 35,000 jobs and the labour-intensive services sectors lost 36,000. Headline employment barely moved, holding at 2.79 million, unchanged on Q1 2025, while the labour force grew by just 0.6 per cent, the smallest annual increase in five years.
Underneath a flat national figure, in other words, roughly 71,000 services jobs went, and 56,500 site and logistics jobs arrived.
The ERF research, carried out by Ipsos B&A among recruitment businesses across Ireland and supported by ICON Accounting, shows how firms are responding. In June, 52 per cent of recruiters filled contract vacancies, up from 41 per cent in April, and the share reporting an increase in contract placements on the previous month doubled over the quarter, from 16 per cent to 32 per cent.
Permanent hiring stayed broadly flat across the same three months. Temporary work went the other way. Some 101,900 people were engaged in temporary agency work in Q1 2026, a fall of 9,400 on the final quarter of 2025, and only 24 per cent of agencies reported an increase in temporary vacancies filled in June, down from 36 per cent in May.
“Employers have not stopped hiring. They have changed how they hire,” said Siobhán Kinsella, President of the ERF. “When the outlook is this uncertain, a contract gets a business the skills it needs now without a permanent commitment it might regret in six months. What we are watching is a services sector shedding roles at the same time as construction and transport cannot fill them, and very few of those people move straight across.”
The Monitor identifies employment costs as the pressure point for SMEs and for labour intensive sectors. CSO figures show average hourly total labour costs rose by 17.4 per cent in the three years to Q1 2026, from €33.15 to €38.92 an hour.
More is already scheduled. PRSI rates rise again for both employers and employees on 1 October 2026, following January increases in the national minimum wage to €14.15 an hour and the first year of employer contributions under the My Future Fund automatic enrolment pension scheme.
Ms Kinsella said the cumulative effect is landing hardest on smaller firms and is shaping decisions now, ahead of Budget 2027.
“The cost of employing someone in Ireland is up 17 per cent in three years and another PRSI increase lands in October. For a small business in a labour-intensive sector, that is often the difference between creating a role and leaving the work undone. Those calls are being made this month, not in the Budget week, and they will show up in the employment figures for next year.”
Softer demand has not made hiring easier. In June, 58 per cent of recruiters reported an increase in time to hire for permanent positions compared with three months earlier, while 40 per cent said it had stayed the same. For contract roles, time to hire stayed the same for 55 per cent and increased for 40 per cent.
The finding runs against employer side surveys reporting shorter median hiring times this year. The ERF measure asks recruitment businesses whether time to hire has moved since the previous quarter, rather than measuring an average across all vacancies, and reflects the roles agencies are engaged on, typically the harder ones to fill.
Client demand held up throughout, with up to 76 per cent of recruiters signing new clients in the previous month.
The seasonally adjusted unemployment rate rose slightly to 5.0 per cent in June 2026 from 4.9 per cent in May and has now remained at or below 5 per cent for 54 consecutive months, the longest sustained period of full employment on record. The Central Bank of Ireland has revised annual employment growth for 2026 down to 1.2 per cent, with 2 per cent projected for 2027.
Finally, recruiter sentiment recovered late in the quarter, with 41 per cent holding a more positive outlook on vacancies for the following three months in June, up from 35 per cent in May.
