Lagarde singled out Germany and Spain as examples. Germany’s GDP would be about 6 percent lower today without migrant labor, while Spain’s strong recovery also “owes much” to foreign workers, she said. Across the eurozone, employment has expanded by more than 4 percent since 2021, even as central bankers pushed through the steepest rate hikes in a generation.
The ECB president argued that migration has played a crucial role in offsetting Europe’s shrinking birth rate and growing appetite for shorter working hours. That, she said, helped companies expand output and damped inflationary pressures even as wages lagged behind prices.
But Lagarde also acknowledged the politics. Net immigration pushed the EU’s population to a record 450 million last year, even as governments from Berlin to Rome move to restrict new arrivals under pressure from voters flocking to far-right parties.
“Migration could, in principle, play a crucial role in easing labor shortages as native populations age,” Lagarde said. “But political economy pressures may increasingly limit inflows.”
She stressed that Europe’s labor market has emerged from recent shocks in “unexpectedly good shape.” But she cautioned against assuming that dynamic will last: demographic decline, political backlash and shifting worker preferences still threaten the eurozone’s resilience.
