Brussels – The Eurozone is growing thanks to the contribution of immigrants. The foreign labor force, whether the result of the free movement of Europeans towards other EU member states or the product of the services of non-EU nationals, turns out to be a key factor in economic performance. The European Central Bank is convinced of this and, in a dedicated analysis, highlights how foreign workers are “a lever for economic growth” of EU countries with the single currency.
“Foreign workers are playing an increasingly important role in euro area labor markets,” according to the analysis of ECB experts. Although foreign workers represented only about 9% of the total labor force in 2022, they have accounted for half of the labor force growth in the past three years, equivalent to 3.1 million additional workers. This implies that “in line with their large contribution to overall employment growth, foreign workers have made a substantial contribution to output growth.”
The combination of two factors benefited the eurozone. On the one hand, there was a general increase in employment, and on the other, there was a greater absorption of non-European job seekers within the labor market. Together, the two “significantly boosted real GDP” in the eurozone, growing from +2.5 percent to +5 percent from 2022 to 2024 (compared to 2021 levels), thanks to foreign contributions. In other words, the ECB experts’ analysis continues, “foreign workers have helped to expand labor supply, alleviate labor shortages and support economic growth – all amid otherwise tight labor markets.”
However, the overall trend has not been uniform. On the contrary, the positive contribution of foreign workers to economic growth has varied among the largest euro-area countries. In countries such as Germany, the national working-age population has declined, and foreign workers have helped mitigate the effects of the aging population and shrinking national labor force. “In Spain, the influx of foreign workers has also contributed significantly to economic growth,” the ECB further noted.
The chapter on Italy is different. The country ranks among the Euroland states with relatively lower labor participation rates of foreigners. Here, higher participation rates of nationals have supported increased economic growth. In Italy, foreign workers have not contributed substantially to employment and thus to output growth, reflecting an all-Italian approach that does not focus on the contribution that can come from abroad.
Caution, however, as things are not always like they seem. Those who turn to foreign labor even more than countries like Italy tend to reserve a precarious status. The European Central Bank notes that although foreign workers are important for growth, they “remain more likely to have a temporary labor contract.” This may reflect “the temporary nature of the jobs they hold and possibly indicate greater challenges in securing permanent employment.”
English version by the Translation Service of Withub
