ECB: Foreign Workers Fueling Post-Pandemic Growth in Euro Zone

Foreign workers have become a major force behind the euro zone’s economic recovery since the pandemic, according to a recent study by the European Central Bank (ECB). The report highlights their growing contribution to labor force expansion, particularly in offsetting the effects of an aging population and shrinking domestic workforce.

The ECB revealed that foreign workers were responsible for about half of the euro area’s labor force growth over the past three years. Many are now entering higher-skilled roles as education levels improve, the blog post noted.

“The influx of foreign workers in recent years has secured a robust growth in the euro area labor force, which has somewhat offset the negative demographic trends,” wrote the ECB economists.

This analysis contrasts with rising anti-immigration sentiment in parts of Europe, where political parties have gained traction by pushing to reduce migration.

With birth rates declining and populations aging, the ECB emphasized that foreign workers are essential to sustaining long-term economic growth in the 20-member euro zone. In countries like Germany and Spain, their presence has been particularly impactful. France and the Netherlands also saw notable, though smaller, contributions.

In Italy, the growth relied more on activating domestic labor due to a lower participation rate, the ECB said.

Importantly, unemployment among foreign workers has dropped in recent years, largely thanks to better access to education and skill-building opportunities, the report concluded.