Patrizio Sicari, OECD
OECD Economic Surveys: Ireland 2025
Abstract
Ireland’s regulatory framework is one of the OECD’s most competition friendly. Even so, skills shortages, high housing and legal costs, and other regulatory constraints pose challenges. In a context of geopolitical fragmentation and deglobalisation, inefficiencies and higher business costs could threaten the country’s status as a leading recipient of foreign investment and hence jeopardise investment-intensive agendas like the green transition and affordable housing. To avoid such risks, policy efforts should focus on fostering access to apprenticeships and other vocational training to address labour shortages and ensuring a skilled workforce while containing labour costs. At the same time, the ongoing reforms to improve labour and social welfare conditions should balance equity and long-term economic sustainability concerns. Improving court system efficiency via enhanced digitalisation, easing administrative burdens, and ensuring public integrity will be equally essential to preserve a competitive cost of doing business.
The recent trend towards global geopolitical fragmentation and more protectionist industrial policies (Chapter 1) could challenge Ireland’s status as a major foreign direct investment recipient, which has been key to improving living standards and public finances. This may jeopardise investment-intensive policy goals, such as the green transition (Chapter 3) and increasing housing supply (Chapter 4), which partly depend on international capital. While a number of factors affect Ireland’s attractiveness to foreign investors, such as the stable political and socio-economic environment, maintaining a competitive cost of doing business and supportive regulations are key to preserving Ireland’s competitiveness. At the same time, policies to facilitate the digital transition, through improvements in skills and innovation, as discussed in depth in the 2020 OECD Economic Survey, would boost productivity growth (NCPC, 2024a).
With respect to costs, the tighter labour market, fuelled by the post-pandemic recovery, has driven compensation of employees above its end-2019 levels in several sectors, in nominal terms (Figure 2.1, Panel A). Moreover, on the back of domestic firms’ low productivity (OECD, 2022a), total hourly labour costs have continued to rise across all firm size categories even after mid-2022, when job vacancy rates began to ease markedly. At the same time, infrastructure gaps, due to past underinvestment and rapid population growth, are increasing costs for businesses (NCPC, 2023). This is most evident in the electricity market, where the limited flexibility of the transmission grid could limit the cost savings associated with increased renewable generation capacity (Chapter 3), with negative repercussions on non-residential consumers, currently facing relatively high electricity prices (Panel B). Housing shortages can also be a barrier to multinational enterprises by raising employee accommodation costs and reservation wages (Chapter 4). Comparatively higher interest rates following the global financial crisis (Chapter 1), coupled with costly legal and insurance services (NCPC, 2023), are additional factors weighing on the cost of doing business in Ireland.
Source: Central Statistics Office, “Compensation of employees at current prices” and “Gross Value Added at basic prices” (databases); and Eurostat, “Electricity prices for non-household consumers” (database).
Against this broad background, this chapter will maintain a narrower focus on labour shortages, the cost implications of planned reforms to improve working conditions, the efficiency of the courts system and regulatory improvements to ease the cost of doing business.
Since the post-pandemic economic rebound, concerns over staff shortages and increased difficulties in recruiting qualified workers have emerged in many sectors. Although lower than in the average EU country, job vacancy rates rose sharply from early 2021 onwards (Figure 2.2, Panel A), despite a tight labour market underpinned by rising employment gains – especially among female, young and older workers – and higher net migration inflows (Chapter 1). As global uncertainties started to weigh on growth, vacancy trends diverged across sectors. As of the third quarter of 2024, following a normalisation of labour demand in the wake of the post-pandemic rebound, combined with restructuring plans in tech multinationals and distress in commercial real estate, vacancy rates had dropped closer to or below pre-pandemic levels in sectors, such as wholesale and retail trade, hospitality services, ICT and construction, which also experienced within-sector employment reallocation away from the slumping commercial real estate sector. At the same time, against the background of strong wage growth, unmet labour demand continued to increase, relative to 2019, in sectors perceived as relatively unattractive due to their less flexible wage structures (Panel B).
Note: 1. The job vacancy rate measures the number of job posts that are vacant as a percentage of all jobs, i.e., vacant and occupied. 4-quarter moving averages are displayed in Panel A.
Source: Central Statistics Office; and Eurostat.
In the longer term, labour shortages risk jeopardising the government’s agenda on housing and climate reforms. Official estimates suggest that an additional 50 000 construction workers will be required, starting from 2023, to meet the housing and retrofitting targets by 2030 (DFHERIS, 2022). Moreover, the recent upward revisions to the Housing for All targets (Chapter 4) will further compound the estimated labour shortages. While construction employment has recovered somewhat from its 2012 trough (Figure 2.3), reaching 161 000 workers as of mid-2024, its share of total employment has hovered around 6% in recent years. Hence, increasing employment in the construction is key. With limited housing availability complicating the recruitment of foreign workers in the short term – although construction-related work permits from countries like Brazil and India have recently risen from very low levels – staff requirements will have to be met largely by domestic workers, despite Ireland’s relatively weak graduation pipeline in construction-related skills (NCPC, 2024b).
Labour shortages severely hamper SME activities. About one third of Irish SMEs stated that finding and hiring staff with the right skills has been very difficult over the past two years, while half identified difficulties in hiring skilled employees as their most serious concern, similar to the EU average of 54% (EC, 2023a). Applicants’ insufficient qualifications, skills or experience and an outright lack of available candidates are the main reasons for the reported labour and skills shortages, followed by the inability to offer more attractive employment packages than competitors. To overcome these challenges, Irish SMEs tend to make less use of fixed-term and self-employed workers than EU peers, and prioritise training and reskilling of current staff, and improving working conditions to retain and attract talent.
Note: Specialised activities include those requiring specialised equipment (i.e., pile-driving, scaffolding, etc.); the horizontal dotted line refers to the estimated size of the workforce required, from 2023, to meet the official housing and retrofitting targets by 2030, as in DFHERIS (2022).
Source: Central Statistics Office, Labour Force Survey Time Series.
Irish businesses are active in trying to attract foreign talent. About one fifth of SMEs reported efforts to hire both EU and non-EU workers to bridge skill shortages, which is among the highest shares in the EU. Such efforts capitalise on the capacity of the domestic labour market to rapidly integrate foreign workers, as proven by minimal gaps between the employment and unemployment rates of non-EU and native workers, in contrast to many EU countries (Eurostat, 2024). In this context, well-designed immigration and integration policies remain essential to ensuring that inflows of foreign workers can sustainably help address labour shortages in the short and medium term (OECD, 2024a).
The Employment Permits Act 2024 enabled greater flexibility in attracting non-EEA workers, particularly in sectors affected by shortages of essential skills (e.g., technology, engineering, construction, and healthcare), while strengthening the protection of permit holders. For instance, the agility of the employment permits processing system has been improved by moving operational details (e.g. the labour market needs test) to secondary legislation for easier modification in response to evolving labour market needs. The new Act also enables the transfer of an employment permit to a new employer after nine months, which will improve working conditions, and introduces a Seasonal Employment Permit, which will support the short-term labour needs of certain sectors (e.g. agriculture and hospitality). An indexation provision will ensure salary thresholds for employment permits remain, at least, in line with average wage growth. A roadmap for increasing minimum salary thresholds for employment permit holders was introduced in December 2023, with the first increases implemented in January 2024. However, owing to broader concerns about rising business costs (see below), the roadmap is currently under review, with any further increases put on hold. Other recent measures, including the expansion of the lists of occupations that are eligible for an employment permit and improved pathways to employment for the spouses and partners of employment permit holders, are also expected to enhance businesses’ capacity to attract foreign talent.
Overall, the new measures might further enhance Ireland’s rank in the OECD indicator for Talent Attractiveness, where Ireland is currently behind Denmark and Canada, but above France and Germany (OECD, 2023a). However, insufficient housing supply and the resulting affordability challenges could limit the ability to address labour shortages through foreign workers, except for highly-skilled and highly-paid jobs (Chapter 4). In the medium term, enhanced digitalisation, including the expanded use of AI, could also help address labour shortages while supporting productivity growth (OECD, 2023b and 2024a), provided the development of complementary skills is effectively supported, as discussed in the 2020 OECD Economic Survey (OECD, 2020).
Enhancing lifelong and vocational training opportunities
Equal access to lifelong learning opportunities is key to reduce skill mismatches. 63% of employed persons aged 25-64 in Ireland had engaged in formal and non-formal training in 2022, nine percentage points above the EU average. However, upskilling pathways for low-skilled, unemployed, and inactive adults, whose relative rates of access to training are lower than those of top EU performers, could be strengthened. Spending on training for the unemployed, at 0.13% of GNI* in 2021, was above the OECD average but accounted for less than 6% of total public spending on active labour market policies, which were largely made up of employment incentives. Training to jobseekers is largely provided in institutional settings, although the proportion of integrated programmes, which split training time evenly between a training institution and the workplace, has increased.
Strengthening vocational education could help address labour and skill shortages in the medium to long term. At 68%, the share of firms providing continuing vocational training to their staff is in line with the EU average, but below the 90% attained in Latvia, Norway and Sweden. The provision of formal apprenticeships, largely involving a balanced mix of institutional and workplace-based training to ensure an adequate blend of theoretical knowledge and practical skills, including in higher education, expanded with the 2021-25 Action Plan. The number of women in apprenticeships grew four times faster than men in 2023, although they accounted only for 8.3% of the total 27 470 apprentice population. The expansion of apprenticeships to additional professions also boosted enrolment. Apprenticeship registration increased markedly in the construction sector, especially in programmes with training on Nearly Zero Energy Buildings and retrofitting (DPENDPDR, 2024). The authorities have also opened two large training hubs dedicated to electrical training and expanded electrical, plumbing, and carpentry programmes, including in higher education. However, more is needed to effectively meet the demand for skills.
Overall, the national education system strongly emphasises pathways to higher education, which lessened the appeal and take-up of vocational pathways, despite the fact that secondary and post-secondary non-tertiary vocational education graduates, who feature an 80% employment rate five years after graduation (OECD, 2023c), can easily go to university. Strengthening work-based learning in secondary schools, combined with improved coordination between further and tertiary education institutions to outline and promote attractive vocational career pathways, could help ameliorate people’s perspective on apprenticeships. This should be accompanied by greater cooperation with social partners to enhance learning and career guidance services.
Successfully navigating the digital transformation will hinge on broad-based training programmes. Although not among the OECD countries most at-risk of digital job displacement effects, occupations at high risk of automation account for close to 7% of Ireland’s total employment, while about 30% of jobs could go through significant changes (Lassébie and Quintini, 2022; Nedelkoska and Quintini, 2018). To preserve the competitive edge of the Irish workforce in the face of automation and digitalisation, enhanced provision of comprehensive training will be essential. This should ensure the development of interpersonal and problem-solving skills, which can enhance complementarities between workers and machines. Skills needed for the adoption of technological innovations should be equally prioritised (OECD, 2023b). At the same time, greater efforts should go towards skill certification in manual jobs with a low risk of automation, especially those of relevant social value (e.g., caregivers), to make them professionally attractive.
Workplace lifelong training aimed at limiting skill depreciation and enhancing reskilling for the digital transition could be financed by the National Training Fund (NTF), especially for SMEs (OECD, 2023d). Funded through an employers’ levy, the NTF’s surplus increased to about EUR 1.5 billion in 2023, underpinned by strong employment growth and levy rate increases, together with relatively stringent spending rules. Since the NTF is factored into the departmental expenditure ceiling, spending from the Fund automatically reduces other supports allocated to the Department of Further Education and Training (PBO, 2023). Budget 2025 announced a multi-year strategy for use of the National Training Fund from 2025 to 2030, which is welcome.
As population ageing strengthens incentives to work longer careers, senior workers, who are also less likely to participate in training, may see rapid automation depreciate their skills and employability. Better recognition of hard and soft skills acquired on-the-job, together with enhanced provision of training in formats more adapted to older workers’ needs, such as same age cohort or in house one-on-one modules, could limit such risks (OECD, 2023d).
Reducing childcare costs to further boost female employment and participation
Further improvements of women’s situation in the labour market could also help ease labour shortages. At about 71%, the female employment rate of women aged 15-64 was at its historical high in the third quarter of 2024. However, close to one third of employed women were on part-time contracts in 2022 (eight percentage points above the OECD average), albeit mostly on a voluntary basis (only 6.2% of female part-time employees linked their job status to the impossibility of finding a permanent job, which is below the 12.1% reported by their male peers). Women’s overrepresentation in part-time jobs could have adverse effects on their long-term labour market perspectives, since such contracts lead to weaker social security coverage, access to lifelong learning, and career progression. In addition, high incidence of female part-time work pushes Ireland’s gender gap in employment rates above the OECD average, once measured in full-time equivalents (OECD, 2022b).
The high cost of childcare creates disincentives for women to work more hours or take part in lifelong learning. Pre-school childcare is privately run in Ireland and, formally, there are no government-imposed caps on fees for kindergartens or childcare services. To help alleviate the burden of childcare costs on families, the government subsidises childcare services for children aged 6 months to 14 years, primarily through the National Childcare Scheme. The scheme offers a universal hourly subsidy upon registration, and a more generous, means-tested subsidy for families with annual incomes below EUR 60 000. Both are deducted by providers from parents’ fees. From September 2022, the government allocated additional ‘core’ funding for registered childcare providers. This funding, also aimed at enhancing capacity, was conditional on maintaining a fee freeze, relative to a 2021 baseline, and using the extra resources to improve staff pay and working conditions, as well as service quality. About 92% of childcare providers have so far enrolled in the scheme, which is in its third year. Core funding base rates have recently been lifted to enable further wage increases and to partly compensate the participating providers for rising costs in the context of a fee freeze. In addition, a new procedure allows some providers to increase fees to approved levels, provided they meet stringent criteria. This is accompanied by the adoption of a common fee structure and the introduction of maximum allowable fees (across the identified fee bands) for new services joining the scheme, while a cap on fees will apply to all services enrolled in the Core Funding scheme from September 2025.
Increased core funding for childcare and hourly subsidies have helped improve affordability, although net childcare cost remains relatively high for middle-income households, especially in urban areas. Data from the OECD Tax-Benefit model, for a two-earner couple with two young children and both adults earning the average wage, show that the out-of-pocket net childcare cost (after having deducted childcare benefits paid by the state) dropped to 22% of the average wage in 2023, down from 29% in 2022. This, however, remains well above the OECD’s 12%. Childcare also remains costly for couples earning 67% of the average wage, but generous public support greatly alleviates its burden on lower income households, especially single parents.
Some benefit recipients face stronger disincentives to enter work or work more, due to the effective taxation associated with the move, namely the cost of childcare, taxes, and withdrawal of certain benefits. For a low-earning family with two young children using childcare facilities, for instance, the effective participation tax for a second earner to move from unemployment to full-time employment (paid at 67% of average wages) will represent 81% of the wage, versus 56% OECD-wide (Figure 2.4). Moreover, disincentives to participate related to the eligibility to social housing add to those resulting from quite high marginal tax rates at different income thresholds (OECD, 2022a), while the lack of affordable childcare appears to be a barrier to young women’s participation in training (Mooney and O’Rourke, 2017).
Participation tax rate for parents claiming unemployment benefits and using childcare services, %, 2022
Note: The participation tax rate measures the financial disincentives to participate in the labour market for a jobseeker claiming unemployment benefits. It calculates the proportion of earnings that are lost to higher taxes, lower benefits and net childcare costs when a parent with young children takes up full-time employment and uses full-time centre-based childcare. Higher values mean higher financial disincentives. Low earnings refer to 67% of average earnings. Children are aged two and three. The unemployment duration is 36 months.
Source: OECD Tax and Benefit Model.
The relatively high cost of childcare results in its lower and unequal use. Average usual weekly hours in early childhood education for 0- to 2-year-olds are lower than the OECD average, which partly reflects policy support for parents to care for children at home during the first year. Moreover, 21% of children aged 0-2 years from lower-income households attend childcare, as opposed to 54% from higher-income ones, while participation is also higher among children of tertiary-educated parents. To ease access to childcare, on the backdrop of rising living costs, the government increased the 2025 budget allocation for early learning and childcare by EUR 266 million to EUR 1.4 billion, including a EUR 338 million core funding envelope. Besides boosting the number of childcare places, the extra funds will also cover the increase in the universal hourly subsidy paid to families accessing registered early learning and childcare, which Budget 2024 raised from EUR 1.40 to EUR 2.14 starting in September 2024.
While the above-described measures eased affordability, with childcare costs varying by area (they are considerably higher in the Dublin region), their effectiveness will differ across households. Besides, the universal subsidy entails deadweight losses. Hence, making childcare subsidies more means-tested could be more effective in enabling better access to childcare by households around the middle-income bracket, who are currently less likely to be eligible for targeted income support but are increasingly squeezed by rising living costs.
Ireland is introducing reforms to improve working conditions. These include the transition towards a national living wage – in line with an EU directive on adequate minimum wages – and the phased introduction of statutory sick pay of up to ten days per year, both by 2026, coupled with improved parental leave, remote working legislation, an additional public holiday, a new pay-related benefit scheme, and the gradual establishment of automatic enrolment into workplace pension savings. While these reforms introduced on the backdrop of a robust domestic economy, consist of measures in line with social protection schemes in most OECD countries and, hence, unlikely to unsettle most foreign investors, there are concerns that their simultaneous implementation may entail some risks to cost competitiveness.
The minimum wage rose from EUR 11.3 per hour worked in 2023, a level already relatively high when measured in purchasing power parity terms (Figure 2.5, Panel A), to EUR 12.7 as of January 2024. In absolute values, this is somewhat above 2024 statutory minimum hourly wages in France (EUR 11.7) and Germany (EUR 12.4), but still below those in the Netherlands (EUR 13.3) and Luxembourg (EUR 14.9), although full data comparability is hampered by slightly differing eligible populations across countries. Given strong wage growth, the planned transition to a national living wage, set at 60% of the median wage, by 2026 suggests additional increases in the near term (Panel B). The transition aims at curbing inequality by boosting disposable income of low-paid workers, on the back of estimates pointing to no significant long-term adverse impact on competitiveness and employment (Low Pay Commission, 2023). Ireland’s hourly minimum wage is above the OECD average but remains below those in Australia, New Zealand and the United Kingdom, in real terms. Moreover, recent simulations based on the OECD Tax-Benefit model for 2023 showed that employers’ labour costs, at both minimum and median wage levels, were below OECD averages.
Note 1. The government agreed, in November 2022, to replace the statutory minimum wage with a new National Minimum Wage, set at 60% of the median wage, by 2026.
Source: OECD, Earnings Statistics (database); Central Statistical Office.
The automatic enrolment scheme, set to be phased in over the next ten years, will require employers who currently do not provide occupational pension coverage to employees, to increasingly contribute into the system, for up to 6% of employees’ gross wage – at full implementation. With only 35% of private sector workers availing of a supplementary pension coverage, the measure will provide higher retirement income to about 750 000 eligible workers currently lacking any occupational pension coverage (Department of Social Protection, 2022), which is welcome.
The costs implied by the above reforms will largely weigh on smaller businesses in labour-intensive sectors. The economy-wide impact of the combined reforms is an estimated 1.8-2.2% increase in payroll cost by 2026 – relatively limited but uneven between and within sectors (DETE/DSP, 2024). With most businesses, especially foreign-owned companies, paying salaries above the minimum wage, only 7% of employees reported earning the national minimum wage or less in 2022. Of these, about 59% worked in low-wage and labour-intensive sectors, i.e., wholesale and retail trade, and accommodation and food service activities (Low Pay Commission, 2023; Redmond et al., 2023). Furthermore, these sectors have a large prevalence of small businesses (CSO, 2023), which might bear the brunt of reform costs. Stylised case studies point to a combined incremental impact on total costs for a small hospitality business of around 9% in 2024 and 27% by 2026 (DETE/DSP, 2024).
While the combined reforms to improve working conditions will be beneficial in the long term, their cumulated impact on business sustainability in specific and mainly domestic sectors, as well as potential broader trickling up price effects, should be closely monitored, also due to possible indirect repercussions on foreign investor incentives. On the one hand, better working conditions raise living standards, reducing social inequalities and the scope for in-work social benefits, while supporting tax receipts and help attract foreign workers with both high and low skills. On the other hand, if not passed to consumers (with the ensuing inflationary pressures), the cost burden from the simultaneous implementation of the reforms could ramp up insolvencies in retail and hospitality industries, which, due to the cumulated effects of the pandemic and cost-of-living crisis, rose in 2023-24, (PWC, 2025). Some degree of insolvency would improve the efficiency of resource allocation, through the exit of less productive firms and a shift of labour towards higher value-added sectors, provided effective retraining programmes are activated. However, with retail and hospitality accounting for one fifth of total employment, a marked downturn in these sectors could raise uncertainties, which makes a more granular assessment of sectoral cost trends key to consider possible adjustments, as needed.
A fair and well-functioning legal system is a key framework condition enabling property rights protection, confidence, and the stability required to successfully pursue investment projects. Companies’ trust in Ireland’s legal and court system is relatively high, with close to 80% reporting themselves very or fairly confident about the effectiveness of investment protection by the law and courts, well above the EU average of 53% (EC, 2023b). Even so, lengthier court proceedings, partly due to pandemic-related backlogs, and high and mounting levels of legal costs, especially of litigation, is a concern (NCPC, 2023). Incomplete digitalisation and fragmented information systems across jurisdictions hamper the production of comprehensive information on courts’ performance, which undermines effective service planning and evidence-based policy-making (INDECON, 2023).
According to national accounts data, Ireland’s spending on law courts per inhabitant, which includes expenditure on the administration and operation of courts and the broader judicial system (excluding prisons), is the third highest in the European Union. Calculations based on budget allocations for the functioning of courts, however, reveal much lower per capita spending, EUR 31 in 2022, lower than EUR 50 in the United Kingdom and France. This may partly be due to Ireland’s low number of judges (3.5 per 100 000 population), the lowest in the European Union, well below the EU average of 20.
Efforts to increase judicial resources have recently been stepped up. Across most levels of jurisdictions, average lengths of civil proceedings had risen markedly after the pandemic (OECD, 2023e). Typical processing times in the High Court, for instance, reached 871 days in 2022, up by about 14% relative to the 2018-19 average. This was largely driven by commercial, judicial review, and personal injury cases, with the average length of the latter surging to 1 325 days (INDECON, 2023; Courts Service, 2023). To reduce delays in legal proceedings, the government appointed 24 additional judges in 2023 and committed to add another 20, conditional on an impact assessment of the initial appointments (Department of Justice, 2023). These measures, once completed, will increase the headcount of judges by 25% to 217. Draft legislation, currently pending before Parliament, introducing a compensation scheme in case of excessively long court proceedings, could create further efficiency gains.
Cross-country evidence suggests that besides the size of resource endowments, court performance also heavily depends on the efficiency with which judicial resources are allocated (Palumbo et al., 2013). Hence, the effectiveness of the courts service will also hinge on ensuring adequate levels of skilled clerical and support staff (Department of Justice, 2022), together with efficiently designed, cost-effective, and user-friendly processes and operations (OECD, 2023e). Following initiatives taken in some OECD countries, this could include the adoption of AI-based techniques, especially to curb repetitive preparatory tasks and streamline case management (Box 2.1).
In Germany, the Baden-Württemberg region has adopted an AI Higher Regional Court Assistant using Natural Language Understanding, in 2023, which enabled Stuttgart’s Court to rapidly ease its backlog of 10 000 cases through more rapid case categorisation and processing. Similarly, Frankfurt’s District Court uses an AI system to draft judgment letters in proceedings with a highly repetitive content (e.g., air passenger rights lawsuits), allowing judges to concentrate on more complex issues. AI applications are used to transcript court hearings or remove participants’ personal data from court judgments set to be disclosed in Estonia. Moreover, fully- or semi-automated online dispute-resolution systems are in place, or being tested, in the Netherlands (divorce cases), Estonia (small claims) and in Canada’s British Columbia and Ontario provinces (digital hearing workspace in civil cases).
Source: Schindler, E. (2024), “Judicial systems are turning to AI to expedite case resolution”, blog; Härmand, K. (2023), “AI Systems’ Impact on the Recognition of Foreign Judgements: The Case of Estonia”, Juridica International, Vol. 32.
Effective integration of information systems conditions efficient case management and planning. Ireland’s courts rely on case management techniques to support their work planning processes but much of the collected data are used mainly in the context of annual reporting and do not necessarily reflect the actual workload of the courts and judges. Cases settled out-of-court following their filing, for instance, are not excluded from the total numbers of cases filed, complicating efficient judicial time management (OECD, 2023e). Moreover, clear common data definitions and data collection standards across the courts, Courts Service (which provides administration and support services to the former) and other relevant jurisdictions are lacking. As a result, the approaches to case and court management often vary considerably across levels of jurisdiction, hindering the accumulation of effective systemic knowledge. A medium- to long-term strategy aimed at the establishment of a single case management system relying on a unified data model was launched in 2021 (Courts Service, 2021). The implementation should be frontloaded, as a comprehensive and integrated data system, which is key to enhancing monitoring and regular evaluation of court performance based on defined indicators, is lacking (EC, 2023c).
Inadequate data frameworks also hinder the monitoring and assessment of litigation costs, which are perceived as high and may reduce incentives to resort to legal action, when needed. Overall, the costs of litigation are case-specific and vary considerably based on claim size, scale of litigation, and level of jurisdiction. For example, litigation raises the legal costs substantially. Recent evidence, based on micro case data related to motor insurance and employers’ liability injury claims in Ireland, showed that legal costs in litigated cases were 2.5 to 4 times higher than in directly-settled cases, accounting on average for about one third of total settlement costs (INDECON, 2023). However, comprehensive information on the detailed components of legal costs by type of litigated and settled cases, and on cost variation by provider and over time is lacking. In addition to hindering evidence-based policymaking, this also increases inefficiencies, as the information asymmetries generated by weak transparency impose indirect costs on consumers of litigation services due to more muted competition.
Lack of internationally comparable data on legal costs limits the scope for cross-country comparisons. However, the closest service component in Eurostat’s harmonised index of consumer prices (HICP), which lacks granularity as it lumps legal and accountancy fees together, and does not provide any information on starting levels, suggests that legal fees in Ireland may have risen faster than the overall HICP over the last five years, in contrast to many other EU countries (Figure 2.6).
% changes, 2019-24
Note: Legal services and accounting is the most detailed HICP category related to legal fees available in the European Classification of Individual Consumption according to Purpose (ECOICOP); it also includes fees for services of assistance in the payment of income taxes.
Source: Eurostat, Harmonised index of consumer prices (HICP).
Competition-enhancing reforms could further improve the legal system’s efficiency and help reduce legal costs. The Courts and Civil Law Act, passed in July 2023, paved the way for the establishment of partnerships between barristers and solicitors, an option already available in the United Kingdom and other common law jurisdictions. The joint provision of such legal services is expected to improve the quality and variety of the expertise offered to customers, and help contain legal fees. Regulatory reforms easing the setting up of multi-disciplinary practices in the legal remit could also boost competition. By integrating the supply of complementary services, multi-disciplinary practices can cater to more complex and interrelated needs, potentially increasing service innovation and efficiency.
Extending the option of a Limited Liability Partnership status to multi-disciplinary practices, as foreseen for existing solicitor firms and legal partnerships, could improve their rather low take-up because of partners’ current unlimited joint liability. Likewise, while the provision on conveyancing services for property transactions is currently monopolised by solicitors, the introduction of a new profession of conveyancer would strengthen competition. Evidence from other common law jurisdictions suggests that the introduction of conveyancers led to lower legal service prices and more compressed fee structures (CCPC, 2022). Supervisory and regulatory powers over the profession should be held by an independent and self-funded professional organisation – tasked as well with overseeing a conveyor indemnity insurance system – placed under the oversight of the Legal Services Regulatory Authority, which is responsible for complaints investigations.
Easing the administrative burden on businesses
Ireland’s regulatory framework is among the OECD’s most competition-friendly (Figure 2.7, Panel A). Even so, entrepreneurial activity and innovation diffusion continue to face regulatory obstacles, while gaps to best practices persist, for instance, in areas like regulatory impact assessment and barriers to entry in services and network sectors (Panel B). Eliminating remaining regulatory constraints and moving closer to the frontier of best practice could enable more efficient resource allocation and enhanced organisational processes. This, on aggregate, may lower the cost of doing business.
Establishing a business is relatively straightforward in Ireland, with limited administrative requirements and costs attached to the registration of new firms (Figure 2.7, Panel B). However, the licensing and permitting requirements for a business to become operational vary considerably – in number and complexity – across sectors and a centralised inventory of all the licenses and permits issued to businesses by public bodies is lacking. An integrated application service, set up in 2014 to allow businesses to renew and apply for licenses online, has fallen short of covering the full range of necessary licences, due to the absence of links with other main licensing portals, including that of the Revenue Commissioner (OECD, 2020). Making participation in the one-stop application service mandatory for all licensors would help enhance the system’s transparency and alleviate the administrative burden on entrepreneurs. Considering the introduction of a ‘silence is consent’ principle to settle applications, following a certain delay, may contribute to easing application backlogs, which have recently risen.
OECD Product Market Regulation 2023 indicators
Note: The indicators range from zero (least stringent) to six (most stringent). Panel B shows low-level indicators for the following medium-level ones: regulations impact evaluation, administrative and regulatory burden, and barriers in service and network sectors. LLCs and POEs stand for Limited Liability Companies and Personally-Owned Enterprises, respectively.
Source: OECD Product Market Regulations Statistics Database.
Strengthening public integrity
Perceived risks of corruption in the public sector have eased somewhat since 2021 (Figure 2.8, Panel A). Likewise, control of corruption is more effective than in the average OECD country (Panels B-D). However, according to the European Commission’s Eurobarometer survey, 59% of Irish citizens consider that corruption is widespread, against an EU average of 70%, and 43% think corruption levels have increased in recent years. At the same time, 60% of Irish citizens consider corruption as an integral part of the country’s business culture, while 65% of them state that the practice hampers business competition, broadly in line with the EU average (EC, 2023d). On the side of businesses, only 28% of companies consider corruption as widespread, versus 65% EU-wide (EC, 2023e).
Ireland openly cooperates with other tax authorities (Panel E) and features a relatively effective anti-money laundering framework, although room for improvement remains on the side of confiscation, investigation, and prosecution settings (Panel F). The Central Bank’s efforts to develop a money laundering risk assessment framework, to enable simulation-based estimates of the possible level of money-laundering in the country, are welcome and should improve the assessment of financial stability risks.
Efforts to strengthen the public integrity system are ongoing. Ireland is among the 12 OECD countries that have put in place the data collection infrastructure needed to adequately monitor the implementation of the public integrity framework, although information gaps persist in some areas (OECD, 2024b). Ireland ranks as a top performer among OECD countries with reference to comprehensive regulation on lobbying and standards on public information, including access to open data (OECD, 2024c). Supported by generalised and effective internal audit proceedings across public sector entities (OECD, 2024c), new legislation enhancing the investigative, sanctioning and enforcing functions of the Standards in Public Office Commission is set to improve the authorities’ capacity to detect breaches to the code of conduct, provided the institution is adequately resourced.
Despite significant improvements, the policy action to tackle corruption and preserve integrity in public offices has been lacking an integrated strategic approach. The authorities, however, are committed to launch a multi-year strategy to tackle corruption in a whole-of-government approach. Coordinated by the stakeholder Advisory Council against Economic Crime and Corruption, the strategy, which will integrate inputs from public consultations held in 2024, is currently under development.
Persisting information gaps should be closed to ensure more effective enforcement of public integrity standards. A 2022 review of the framework for ethics in public office recommended more streamlined and efficient processes for interest disclosure (Department of Public Expenditure and Reform, 2022), which is currently required for members of parliament and local authorities, as well as for most categories of high-ranking officials. In addition, it proposed extending the disclosure regime to all relevant public office positions, with requirements scaled to responsibility and potential for conflict. Digitalising interest and asset disclosures for all civil servants and promoting the collection, verification and publication of the information submitted could markedly enhance regulatory compliance and boost trust in public institutions. Tighter political financing and interest disclosure rules, as well as enforcement of lobbying and revolving doors regulations will also be key to ensuring the resilience of public integrity frameworks in the face of the policy-making challenges posed by the green transition (OECD, 2024c). The close interrelation between public and private sector actors, which is a necessary corollary of climate change and decarbonisation policy efforts, can enhance the risk of collusive behaviour and lead to suboptimal use of funds for climate projects, undermining transition goals (Resimić, 2022).
The regulatory framework has been improving. Supported by new legislation making bid-rigging a criminal offence, as well as by the release of detailed official guidelines to ensure well-managed, fair and transparent competition (Office of Government Procurement, 2023), public procurement regulations are largely in line with international best practice. However, rules enabling the use of bid-screening techniques to detect – and deter – irregularities are still missing (CCPC, 2023). Similarly, the competition authority’s investigative and merger control powers, including the ability to ‘call in’ mergers below the revenue thresholds requiring a notification, manage an administrative leniency policy, and impose interim measures and administrative financial sanctions – albeit subject to court approval, were enhanced in September 2022. By tackling larger companies’ practice to maintain market dominance by absorbing innovative start-ups, the new prerogatives should support innovation diffusion and more competitive markets, especially at the local level (Treacy and Ryan, 2023).
Note: Panel B shows the point estimate and the margin of error. Panel D shows sector-based subcomponents of the “Control of Corruption” indicator by the Varieties of Democracy Project. Panel E summarises the overall assessment on the exchange of information in practice from peer reviews by the Global Forum on Transparency and Exchange of Information for Tax Purposes. Peer reviews assess member jurisdictions’ ability to ensure the transparency of their legal entities and arrangements and to co-operate with other tax administrations in accordance with the internationally agreed standard. The figure shows results from the ongoing second round when available, otherwise first round results are displayed. Panel F shows ratings from the FATF peer reviews of each member to assess levels of implementation of the FATF Recommendations. The ratings reflect the extent to which a country’s measures are effective against 11 immediate outcomes. “Investigation and prosecution¹” refers to money laundering. “Investigation and prosecution²” refers to terrorist financing.
Source: Panel A: Transparency International; Panels B & C: World Bank, Worldwide Governance Indicators; Panel D: Varieties of Democracy Project, V-Dem Dataset v12; Panels E & F: OECD Secretariat’s own calculation based on the materials from the Global Forum on Transparency and Exchange of Information for Tax Purposes; and OECD, Financial Action Task Force (FATF).
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