Foreign workers have played a significant role in driving economic growth within the euro zone since the onset of the pandemic, according to a recent study by the European Central Bank (ECB). The analysis highlights that foreigners accounted for half of the growth in the labor force over the past three years.
This influx has been crucial in alleviating labor shortages and has led to an increase in their participation in higher-skilled jobs, reflecting improved education levels among foreign workers. The ECB’s findings emphasize that the presence of foreign workers has helped maintain robust growth in the euro area’s labor force.
This has served to counter some of the adverse effects of negative demographic trends, such as an aging population and low birth rates. The blog post authored by senior economists at the ECB suggests that foreign workers could play a vital role in addressing the constraints posed by a shrinking labor market, thereby supporting continued economic growth.
Interestingly, this analysis stands in contrast to current political trends across Europe, where parties advocating for reduced immigration have gained popularity. As the population of the 20-nation bloc continues to age, the potential for economic growth becomes increasingly limited.
The ECB argues that foreign labor could help mitigate these challenges. The impact of foreign workers varies across different countries in the euro zone.
For instance, Germany and Spain have seen significant contributions to labor force growth from foreign workers, while in France and the Netherlands, the contributions are notable but lesser in scale. In Italy, where domestic labor participation remains low, the increased utilization of local workers has provided a boost to the economy.
Additionally, the ECB noted a decline in unemployment rates among foreign workers, primarily attributable to the advancements in their education levels.