Economic Boost from Migration

An influx of foreign workers has given the euro zone's economy a notable boost in recent years, helping offset shorter working hours and lower real wages, European Central Bank President Christine Lagarde said on Saturday (Aug 23).

Migration into the European Union pushed its population to a record high last year despite declining birth rates. However, governments are now placing curbs on new arrivals in response to growing domestic discontent.

Lagarde’s Remarks at Jackson Hole

Lagarde highlighted the rise in the number of workers from outside the 20 countries that share the euro as a key factor supporting the bloc’s economy. This comes despite a growing preference for fewer working hours and a fall in living standards in some sectors.

"Although they represented only around 9 percent of the total labour force in 2022, foreign workers have accounted for half of its growth over the past three years," Lagarde said in a speech at the US Federal Reserve's annual symposium in Jackson Hole, Wyoming. "Without this contribution, labour market conditions could be tighter and output lower."

Impact on Germany and Spain

Lagarde noted that Germany’s gross domestic output would be around 6 percent lower than in 2019 without foreign workers. She also emphasized that Spain’s strong economic performance since the end of the COVID-19 pandemic owes much to the contribution of foreign labour.

Population Trends in the EU

The EU's population rose to a record 450.4 million people last year. This growth was driven by net immigration, which offset a natural population decline for the fourth consecutive year.