Foreign Workers Have Boosted Euro Zone Economy: ECB

An influx of foreign workers has given the euro zone’s economy a significant boost in recent years, helping offset shorter working hours and lower real wages, European Central Bank President Christine Lagarde said on Saturday, Reuters’ Francesco Canepa reported.

The rise in workers from outside the 20 euro-area countries is a key factor supporting the bloc’s economy. (Photo: Hull University Teaching Services)

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

Lagarde highlighted the rise in workers from outside the 20 euro-area countries as a key factor supporting the bloc’s economy, even amid a growing preference for fewer working hours and falling living standards in some sectors.

“Although they represented only around 9% of the total labor force in 2022, foreign workers have accounted for half of its growth over the past three years,” Lagarde said in a speech at the U.S. Federal Reserve’s annual symposium in Jackson Hole, Wyoming.

“Without this contribution, labor market conditions could be tighter and output lower.”

She added that Germany’s GDP would be about 6% lower than in 2019 without foreign workers, while Spain’s strong economic performance since the end of the COVID-19 pandemic also owed much to foreign labor.