Foreign Workers Fuel Eurozone's Economic Growth

Foreign workers have significantly contributed to the eurozone's economic growth post-pandemic. Accounting for half of the labor force growth in recent years, they help mitigate labor shortages and enhance skill levels. Despite political trends against immigration, their influx supports the aging and shrinking labor market.

Foreign workers have largely driven the eurozone's economic growth following the pandemic, according to a recent European Central Bank (ECB) study released Thursday. These workers comprised half of the bloc's labor force growth over the past three years, easing labor shortages and contributing to higher-skilled positions as their educational qualifications improve.

"The influx of foreign workers in recent years has secured robust growth in the euro area labor force, offsetting negative demographic trends," the blog post by senior ECB economists noted. This finding contrasts sharply with political trends across Europe, where anti-immigration parties have gained ground.

As the 20-member bloc faces an aging population and declining birth rates, economic growth faces constraints, which foreign workers could help address. In major economies like Germany and Spain, foreign workers have significantly bolstered labor force growth, with noticeable but smaller contributions in France and the Netherlands. Meanwhile, in Italy, domestic labor played a key role given its low participation rate.

Additionally, the surge in foreign workers has coincided with decreasing unemployment among them, attributed to rising education levels, noted the ECB.

(With inputs from agencies.)