Jobs market cools as youth unemployment rises and public sector hiring drives growth
Department of Finance report signals labour market normalisation with implications for housing demand
18 February 2026 | đŸ“§Â editor@ipropertyradio.com
Ireland’s unemployment rate has risen to 5% as employment growth slows, while youth unemployment has climbed to almost 12%, according to the Department of Finance’s latest Economic Insights report.
The data show the jobless rate increasing from a near-historic low of 4.2% in Q3 2024 to 5% by Q3 2025. Although still low by historical standards, the shift marks a move away from the exceptionally tight labour market conditions seen in the immediate post-pandemic period.
Annual employment growth slowed to around 2% in 2025, down from 6.9% in 2022 and 3.4% in 2023. Total employment nonetheless reached a record 2.81 million in Q3 2025, up from 2.37 million pre-pandemic – an increase of approximately 440,000 or 19%.
For the property industry, the direction of travel matters as much as the level. A moderating jobs market typically dampens the pace of new household formation, particularly among younger cohorts who drive rental demand and first-time buyer activity.
Youth unemployment has risen from 8.5% in early 2022 to almost 12% in January 2026. Employment among 15–24 year olds is 5% lower year-on-year, equivalent to around 17,000 fewer jobs. This group represents a significant share of renters and prospective first-time buyers. A weaker employment outlook may delay purchase decisions and increase reliance on the rental sector or shared accommodation.
The report also highlights widening divergence by education level. Since Q3 2024, unemployment has risen to 10% for those with primary education and to 7% for those with secondary education, while remaining broadly stable at around 3½% for tertiary graduates. This divergence has implications for mortgage eligibility and affordability, reinforcing a divide between higher-skilled households and those in more vulnerable employment categories.
At the same time, the composition of employment growth has shifted. Around 40% of overall employment gains since just before the pandemic have come from Health, Education and Public Administration. Employment in these publicly dominated sectors increased by 28% between Q4 2019 and Q3 2025, and they now account for 27½% of total employment.
For the housing market, this concentration of job growth in public and quasi-public services may sustain demand in regional cities and towns anchored by hospitals, schools and administrative centres, rather than solely in technology-led urban clusters.
The Department concludes that Ireland’s labour market is entering a period of normalisation after an exceptionally strong post-pandemic expansion. For the property sector, the data point to continued underlying demand supported by high overall employment levels, but with softer momentum among younger and lower-skilled workers.
In practical terms, this suggests a more uneven housing market in 2026: resilient demand from secure, higher-skilled and public sector workers, alongside greater caution among younger households facing a less certain employment outlook.
