28
Aug 2025
Europe’s recent growth owes much to migrants, but the political climate could choke off those gains.
That was the warning from European Central Bank (ECB) President Christine Lagarde, who told global policymakers that foreign workers now form the backbone of the continent’s fragile recovery.
Migrants fill gaps in shrinking workforce
Lagarde spoke at the Federal Reserve’s symposium in Jackson Hole, Wyoming, where she pointed to the numbers.
Since late 2021, employment in the Eurozone has risen by 4.1%. Half of that came from foreign-born workers, even though they made up less than one-tenth of the labor force in 2022.
Without them, she said, labor shortages would have been sharper, unemployment higher, and economic output weaker.
Country recoveries tied to migrant labor
Germany’s gross domestic product would stand 6% lower today without migrants, according to Lagarde. Spain, too, saw its post-pandemic rebound strengthened by their contribution.
Migrants kept businesses running, filled jobs in sectors struggling to hire, and gave companies room to expand output. That helped to ease inflation at a time of energy shocks and high interest rates.
Inflation pressures held in check
The rise in foreign-born participation allowed growth without runaway inflation. Migrants, along with older citizens rejoining the workforce, widened the labor pool.
Lagarde noted that the Eurozone jobless rate is now 6.3%. Without migrants, it would be 6.6%.
(Image courtesy of Ridofranz via iStock)
Political resistance builds
The EU’s population hit a record 450 million last year, largely due to net immigration. However, in many capitals, leaders are under pressure to restrict new arrivals.
Germany suspended family reunification and resettlement programs, while Italy and other countries tightened controls. Voter frustration has fueled support for far-right parties that frame migration as a threat rather than an economic lifeline.
Border checks grow stricter as labor needs persist
Visitors planning trips to Europe will soon face new entry rules. Beginning in late 2026, nationals from 59 visa-exempt countries must obtain authorization through the European Travel Information and Authorization System, or ETIAS.
Linked to a traveler’s passport, the permit will cost €20 and allow stays of up to 90 days within a 180-day window across 30 participating states.
For tourists and business travelers, this means an extra step before departure, though most applications will be processed within minutes. For migrants seeking work or residency, the system signals a broader shift: tighter control over who enters, even as Europe relies heavily on foreign labor.
Stricter screening may slow irregular entries, but it could also complicate pathways for people who eventually seek to transition from short-term stays to long-term employment.
Political winds steer new entry rules
Lagarde’s remarks about Europe’s dependence on migrant labor land at a moment when governments are rewriting their immigration playbooks. Economic data shows foreign workers easing labor shortages, but leaders under pressure from voters are moving to narrow entry routes.
Germany has already suspended some family reunification programs, while other countries weigh similar restrictions.
Rather than open the door wider, policymakers are leaning toward selective systems—tightening asylum rules while expanding targeted work visas. That approach may satisfy political demands while keeping certain industries staffed.
Yet it leaves Europe walking a thin line: needing migrants to keep economies growing, while responding to public unease by layering more conditions on who qualifies to enter and stay.
(Imager courtesy of hanohiki via iStock)
A turning point for Europe’s growth
Lagarde’s remarks emphasize a straightforward reality: Europe’s economy can’t grow without migrants. Foreign workers have filled gaps left by aging populations and shifting work habits, contributing half of recent job growth.
However, their role is now caught in a political debate that could reshape the region’s future. The choice for Europe is simple—accept migration as part of its economic strength or risk slower growth and tighter labor markets.
How should Europe handle that balance?