Q4 2025 Labour Market Report: What Employers in Ireland Need to Know
What Is the Current State of Ireland’s Labour Market in 2025?
We are heading into Q4 of 2025 and it’s been a year for caution and unpredictability so far. I speak with other recruitment leaders in Ireland and the UK all the time. Anecdotally, most recruitment businesses are not having a great year. It’s hard to bring in new business, it’s hard to close deals. Candidates are cautious about moving so quite risk averse. Employers are nervous and adding headcount in case the market turns against them. So if we see recruitment businesses struggling to hit targets this can be seen as an indicator for the wider economy also.
However, there is hiring happening. Money can be made by recruitment businesses, we all just have to work very hard for it. This is ok, it’s what the market would have been like back in 2018 or 2019.
If we zoom out and consider the economy as a whole, we saw some interesting trends in 2025. According to the CSO, the unemployment rate in Ireland was at 4.8% in August, and it has ticked up to a high of 4.9% in July. Very interesting to see it go down slightly.
Ireland continues to struggle with the cost of living. This can be seen by the lower footfall in bricks and mortar retail and puts pressure on small employers who try to keep their costs of doing business down, while balancing higher demand for wage increases. The prices in Ireland have been relatively stable in 2025, but remain much higher than 2024.
In Ireland we have seen the minimum wage increase, which is great, but grouped with the stepped increase in statutory sick pay, pension auto enrolment and potentially increasing the employer PRSI burden, it means businesses are making less money. This puts pressure on companies to drive up prices.
Very positively, Ireland will have a very impressive GPD scope in 2025. This is projected to be around 9%. This was fueled by panic buying of our products due to tariffs. This saw a huge spike in GDP in Q1 2025. This will settle down in 2026, but GDP is holding quite well.
Which Sectors Are Driving Hiring Demand in Ireland Right Now?
If we focus on the technology sector in Ireland, we saw a lower demand than normal for contractors and for full time employees in 2025. There was a lot of caution in the Irish tech sector in 2025. This stems, in my opinion, from a lot of the tech businesses being US companies who were influenced by US politics. So they were potentially being cautious about hiring outside the US due to push back, struggling to make sales due to the uncertainty around tariffs or, using this opportunity to downsize and get rid of employees they didn’t want any more in order to drive up profitability.
Data Centres in Ireland
The data centre sector in Ireland has enjoyed huge growth over the last 15 years. 2025 saw a little wobble when Microsoft pulled out of a number of deals in January. This however has turned out to be more of a recalibration as many data centre investments have been announced since. But these new sites are not in Ireland. The continued de facto moratorium has stifled Ireland’s ability to build data centres and continue to position itself as a centre of excellence for digital infrastructure. With this said, Irish companies that serve the data centre sector continue to thrive by winning business outside of Ireland, mostly across the EU.
Growth of AI in the Software Development sector
We are seeing a lot of investment into areas such as AI and cyber security. As AI tools enable greater technological capability, this also brings more risk to companies. So the increased demand for cyber security professionals makes sense.
AI is on everyone’s lips in 2025. The pace of improvement is rapid. We saw a lot of companies pop up building products to leverage AI. The reality is that most of these will probably not deliver enough value and fail, but there will be some big winners. Ultimately, every technology company needs to be leveraging its capabilities.
One trend that we have seen on the back of this is a caution to hire software engineers in 2025. My view is that the Boards in tech companies believe that AI tools will negate the need to hire more engineers. On the ground though, this is not proving to be the case. These tools are useful and help engineers, but they are not ready to replace. There are too many mistakes and errors.
In GemPool, we host regular CTO events and we speak to software engineering leaders about what they are seeing and hearing every day. The consistent message is that AI is useful, but still needs a lot of supervision. It does increase a software engineer’s ability to code faster, but could not be trusted to do things on its own.
As a result, we are seeing a slight increase in demand for software engineers going into Q4 of 2025. Perhaps the market has gotten over the initial hype of AI and is starting to settle into a phase of adoption that delivers actual ROI?
How Are Candidates Approaching the Market Differently?
Candidates have generally been risk averse in 2025. This means they are less likely to go explore a new role and engage with the job market. So what might look like strong retention across businesses, may be fueled by fear of losing a job rather than an incredible culture with highly engaged staff.
There are candidates flowing onto the jobs market when there are layoffs, but we don’t see them staying there for long. Also, as candidates worry about potential layoffs, they are willing to be more flexible with employers around going back into the office or not getting a payrise that, in the past, would have pushed them to go look elsewhere.
We have seen a big move back to the office in 2025. This has continued in Q3 but most companies have now settled into a model that will most likely stick for the next couple of years.
Employees continue to seek pay rises, naturally. The cost of living described above is a key element of this. But it’s not just pay. Employee’s value and are motivated by both extrinsic and intrinsic incentives. We conducted a comprehensive survey of employees and the most popular ‘benefits’ that they valued were career development and flexibility (both intrinsic) and bonus, health and pension (all extrinsic). The employers who are finding the right balance here will retain talent more easily. You can read more about our employee benefits survey here.
What’s Next: A Glimpse Into 2026
While it’s futile to try to predict the future, especially when everything is changing constantly, it is worth considering a few potential trends we might see next year.
AI will continue to dominate the playing field. There has been a lot of comparison to the AI wave to the Dot com bubble. So perhaps we will see a lot of AI businesses fail, and then a more steady adoption of AI with companies growing who truly deliver excellent value from their products. What will this mean for the Irish tech industry, I think we will see ‘big tech’ grow in 2026. These brands have consolidated and downsized, but they are also the companies best placed to dominate the AI market. So we may see a growth in headcount across these companies in 2026 in Ireland.
IT Salary Guide 2026 Coming Soon…
Ireland’s economy continues to score well across key economic indicators like unemployment rate, GDP, tax take. The Irish economy is made up mostly of SMEs. The decision the government makes to support smaller businesses will have a big impact on hiring needs across all SMEs. This can have a potentially positive or negative impact on the labour market. Let’s see what happens.
There will be pockets of the tech sector that will see salaries going up, with most keeping pretty steady. If you want to be the first to find out what the salaries will be in 2026, you can register your interest in our IT salary guide for 2026 here.
Overall the labour market is mixed. There are some tailwinds but also headwinds. Lets see how it plays out over the coming months and Ill report back with more insights at the end of the year.
You can reach out to us if you want to discuss any of these insights on info@gempool.ie or check out our insights section of our website.
