2007 to 2016
Following the onset of the post-2008 Irish economic downturn, Labour's political fortunes began to alter rapidly. At the local elections of 5 June 2009, the Labour Party added 31 new councillors to their tally and performed particularly well in the Dublin region. At the 2009 European Parliament election held on the same day, the Labour Party increased its number of seats from one to three, retaining the seat of Proinsias De Rossa in the Dublin constituency, while gaining seats in the East constituency with Nessa Childers, and in the South constituency with Alan Kelly. It was the first time since the 1979 European Parliament Elections that Labour had equalled the number of seats held in Europe by either Fianna Fáil or Fine Gael.
On 11 June 2010, a poll by MRBI was published in The Irish Times which, for the first time in the history of the state, showed the Labour Party as the most popular, at 32%, ahead of Fine Gael at 28% and Fianna Fáil at 17%. Eamon Gilmore's approval ratings were also the highest of any Dáil leader, standing at 46%.
At the 2011 general election, Labour received 19.5% of first preference votes, and 37 seats. It was the most seats the Labour party had ever won in the Dáil, and their highest percentage of first-preference-votes since the Spring Tide of 1992. On 9 March 2011, it became the junior partner in a coalition government with Fine Gael for the period of the 31st Dáil. Eamon Gilmore was appointed as Tánaiste (deputy prime minister) and Minister for Foreign Affairs and Trade.
In October 2011 the Labour Party's candidate, Michael D. Higgins was elected as the 9th President of Ireland. On the same day, Labour's Patrick Nulty won the Dublin West by-election, making the Labour Party the first government party in Ireland to win a by-election since 1982.
Labour lost seven parliamentary members over the course of the 31st Dáil. On 15 November 2011 Willie Penrose resigned over the closure of an army barracks in his constituency. On 1 December 2011 Tommy Broughan lost the party whip after voting against the government in relation to the Bank Guarantee Scheme. On 6 December 2011 Patrick Nulty lost the party whip after voting against the VAT increase in the 2012 budget. On 26 September 2012 Róisín Shortall resigned as Minister of State for Primary Care and lost the party whip after conflict with the Minister for Health James Reilly. On 13 December 2012 Colm Keaveney lost the party whip after voting against the cut to the respite care grant in the 2013 budget. Senator James Heffernan lost the party whip in December 2012 after voting against the government on the Social Welfare Bill. MEP Nessa Childers resigned from the parliamentary party on 5 April 2013, saying that she "no longer want[ed] to support a Government that is actually hurting people", and she resigned from the party in July 2013. In June 2013, Patrick Nulty and Colm Keaveney resigned from the Labour Party. Willie Penrose returned to the parliamentary Labour Party in October 2013.
On 26 May 2014, Gilmore resigned as party leader after Labour's poor performance in the European and local elections. On 4 July 2014, Joan Burton won the leadership election, defeating Alex White by 78% to 22%. On her election, she said that the Labour Party "would focus on social repair, and govern more with the heart". Burton was the first woman to lead the Labour Party.
In the 2016 general election, Labour suffered the worst general election in its history, winning only 7 of the 37 seats they had won in 2011 and receiving 6.6% of first preference votes. In May, Burton announced that she would step down as leader of the party.
On 20 May 2016, Brendan Howlin was elected unopposed as leader; following his election, some within the party expressed dissatisfaction that there was no member's ballot held, as prospective leadership candidate Alan Kelly did not receive a nomination from any sitting TD. Howlin stated that as leader he was prepared to bring Labour back into government, citing the lack of influence on policy from opposition. He denied any suggestions that Labour could lose any further support from their 2016 performance, stating "We're not some outfit that comes out of the morning mist and disappears again. We're the oldest party in the state".
