Lagarde singled out Germany and Spain as examples. Germany’s GDP would be about 6 percent lower today without migrant labor, while Spain’s strong recovery also “owes much” to foreign workers, she stated. Across the eurozone, employment has expanded by more than 4 percent since 2021, even as central bankers pushed through the steepest rate hikes in a generation.
The ECB president argued that migration has played a crucial role in offsetting Europe’s shrinking birth rate and growing appetite for shorter working hours. That, she stated, supported companies expand output and damped inflationary pressures even as wages lagged behind prices.
But Lagarde also acknowledged the politics. Net immigration pushed the EU’s population to a record 450 million last year, even as governments from Berlin to Rome relocate to restrict new arrivals under pressure from voters flocking to far-right parties.
“Migration could, in principle, play a crucial role in easing labor shortages as native populations age,” Lagarde stated. “But political economy pressures may increasingly limit inflows.”
She stressed that Europe’s labor market has emerged from recent shocks in “unexpectedly good shape.” But she cautioned against assuming that dynamic will last: demographic decline, political backlash and shifting worker preferences still threaten the eurozone’s resilience.
Leave a Reply