Lagarde Highlights Migration’s Impact on Eurozone Labor Market
The President of the European Central Bank (ECB), Christine Lagarde, emphasized the pivotal role of migration in bolstering the eurozone’s labor market, noting that without migrant labor, Germany’s GDP could be about 6 percent lower today, and Spain has seen significant recovery thanks to foreign workers, reports 24brussels.
Lagarde pointed out that since 2021, employment within the eurozone has increased by over 4 percent, despite the most aggressive interest rate hikes in decades implemented by central bankers. She argued that migration is essential to counteract Europe’s declining birth rate and the increasing demand for shorter working hours, which in turn facilitates business growth and mitigates inflationary pressures even as wages struggle to keep pace with rising prices.
However, Lagarde acknowledged the political ramifications of migration. The EU’s net immigration reached an all-time high of 450 million in the previous year, prompting governments from Berlin to Rome to impose restrictions on new arrivals amid rising pressures from voters leaning towards 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 highlighted the current robustness of Europe’s labor market following recent economic shocks, but warned that this positive trend may not be sustained. Ongoing demographic decline, political pushback, and changing preferences among workers continue to pose threats to the eurozone’s stability.
