These two factors together mean that the labour force has the potential to grow further.
ad 2) Investment in education and increase in level of educational qualification
Second important factor was Irish decision to invest in human capital. Thanks these investments, the Irish educational system has expanded dramatically since 1960s. The Irish had introduced free second level education in 1967. This step acknowledged the importance of investment in education for economic growth and development.
Educational expansion resulted in a gradual increase in the stock of human capital of the labour force, a process of upgrading which is still in progress. The older workers close to retirement attained relatively low level of education: about ⅔ are only primary educated and less than 10% tertiary educated. Generation born in the 1960s, which started to work in the 1990s: about 60% are secondary educated and about ¼ is tertiary educated. The amount of tertiary educated people has increased in the 1990s. Nowadays, almost 80% of population have completed the secondary education. The continued increase in educational participation in the 1990s has meant that Irish participation in tertiary education is similar to other more advanced industrial countries. The result of investment in education is: increase in the supply of skilled (or high-skilled) labour and on the other side reduction of unskilled (or low-skilled) labour. The same happened on the demand-side: substantial increase in demand for skilled and a fall in demand for unskilled labour. analysing micro-data on earnings, show that the returns to education increased between
ad 3) Economic openness and improvement in competitiveness
Since the 1950s the Ireland has orientated itself to closer integration with the international economy. Several steps were introduced to remove trade barriers: the conclusion of agreement on free trade with the closest and most important neighbour-United Kingdom in 1965, the entry to the European Community in 1973, participation in the Single European Market process in 1992, joining the common European currency in 2002. This led to shifting away from a heavy dependence on agricultural exports to Britain to a wide variety of product selling into different overseas markets. The second important step to open and more competitive economy has been the active promotion of foreign direct investment in manufacturing. Foreign direct investment transformed the Irish economic structure. The FDI in Ireland are heavily concentrated in modern high-tech product sectors- engineering, instrumentation, computers and chemical industries, but they are becoming important in financial and business services.