Updated / Wednesday 6th August, 2025

Employers seek flexibility as permanent hiring slows, and skills pressures persist

Employment and Recruitment Federation Q2 2025 Labour Market Monitor shows permanent hiring slowing as businesses navigate wage pressure and labour gaps

Irish employers are increasingly turning to short-term and project-based hiring solutions as they continue to manage workload demands, rising employment costs and ongoing skills shortages.

According to the latest Labour Market Monitor from the Employment and Recruitment Federation (ERF), many employers reported increased use of temporary staff in Q2 2025. While 39% of ERF member firms noted an uptick in temporary placements in May and June, national figures from the CSO indicate agency work has declined since 2023, suggesting different trends across sectors and recruitment types.

Permanent hiring activity fell in April and May before stabilising in June, while contract hiring remained in net decline throughout the quarter. The data suggests that employers are holding back on longer-term commitments amid an uncertain economic backdrop and cumulative cost pressures including minimum wage increases, PRSI changes and statutory sick pay.

We’re seeing employers adapt in real time to the pressures they face and that means leaning more heavily on temporary and project-based work, said Siobhán Kinsella, President of the ERF. This isn’t about a lack of confidence. It’s about managing risk in a market where skills are scarce, and costs are up.

The report, conducted by Ipsos B&A, highlights several key trends:

• 83% of businesses reported difficulty finding candidates with the right skills
• Skills shortages remain most acute in IT/data, engineering, logistics and operations
• Wage growth continues, but at a slower pace than Q1. Temporary roles in specialist areas are seeing targeted increases to secure scarce talent

While Ireland’s overall labour market remains strong with a record 2.81 million people in employment and the unemployment rate steady at 4.0% in June, hiring patterns indicate a shift toward agility rather than expansion.

The ERF notes that its member data offers real-time insight into recruiter activity and may reflect emerging trends not yet visible in official statistics.

This quarter’s findings also come as businesses factor in wider global developments, including transatlantic trade tensions and future workforce planning.

The fundamentals remain solid, but we can’t ignore the mounting complexity, Kinsella said. Employers need responsive policies that match today’s labour challenges and that includes prioritising investment in training and skills.