Immigration will need to be used to offset Ireland’s ageing population due to low birthrates, according to a new report by the Department of Finance.
The Future Forty: Ireland’s Demographic Outlook report, published today, warned that an increasing old-age dependency ratio will “increase pressure on public finances, with rising costs for pensions, healthcare, and social services.”
It noted that Ireland’s fertility rate has fallen from 2.6 births per woman forty years ago to just 1.53 today, and is expected to decline further to 1.3 by 2038 before stabilising.
“On the current fertility rate trajectory, Ireland’s non-migrant labour force is projected to decline from 2035 onwards,” the report said.
“Immigration has the potential to offset some of these demographic challenges by boosting the working-age population and filling critical skills gaps. In turn, this can contribute to improved economic growth, innovation and productivity.”
The paper outlined three scenarios for future migration. In its central scenario, net migration is projected to remain between 35,000 and 40,000 people annually, resulting in a population of 6.77m by 2065, with labour force growth sustained until 2047.
In a higher migration scenario, with annual net migration between 53,000 and 58,000, the population could reach 7.59m by 2065. By contrast, in a low scenario where migration falls to around 18,500 annually, the population would be 6m in 2065, with the labour force contracting from 2041.
The report also highlighted that migration flows are highly unpredictable, but remain the “sole driver” of long-term labour force growth. It added that if net migration were to fall to zero by 2035, Ireland’s workforce would begin contracting while the number of retirees continued to grow.
“The economic consequences of such a fall would potentially be very negative,” the report said.
“It would pose major challenges for Ireland’s enterprise base, diminish the capacity of the State to provide public services, and ultimately reduce living standards as a shrinking labour market constrains economic growth.”
The Department of Finance also flagged that high levels of net migration could strain existing infrastructure, warning that contingency plans are needed “to avoid potential infrastructure bottlenecks constraining growth.”
Ireland’s population has already been rising more quickly than pre-pandemic trends, largely due to inward migration. Between April 2023 and April 2024, net migration stood at 79,300, more than double the annual average of 37,700 between 2016 and 2020.
John McCarthy, the Department’s Chief Economist, told RTÉ that its population projections are higher than the CSO’s due to stronger forecasts for immigration. But he acknowledged that housing was already under pressure.
“One of the reasons we are where we are with housing is the population,” McCarthy said.
Last year, Finance Minister Paschal Donohoe was asked by Gript whether the Government had any plans to encourage larger families in response to demographic decline. At the time, he said no such measures were being considered, remarking that “we still have a population that’s growing.”