European Central Bank: Immigration boosts eurozone labour force

Immirgation has made a "large positive contribution" to the labourforce according to the ECB. [Lukasz Pajor/Shutterstock]

Immigrants have made a large contribution to the working-age population of the eurozone since 2013 and are likely also boosting its labour force, particularly in Italy and Germany, the European Central Bank said on Thursday (21 September).

A huge influx of migrants in the past few years has become a major campaign topic ahead of general elections in Germany and Italy, where some parties say it is exacerbating unemployment in some areas.

In a monthly bulletin, the ECB said immigrants were likely supporting the size of the eurozone labour force, which includes both employed and unemployed people and contributes to calculations of potential economic growth, but excludes those not looking for work.

“Immigration has made a large positive contribution to the working-age population during the recovery, reflecting primarily the inflow of workers from new EU Member States,” the ECB said.

“In turn, this is likely to also have had a significant impact on the labour force, particularly in Germany and Italy, but also in some smaller euro area economies.”

Germany holds a general election at the weekend, while Italians are due to go to the polls next year. Anti-immigration parties have been winning support ratings of 10% or more in both countries.

The ECB said the labour force had continued to increase throughout the crisis, albeit at a slower pace than before 2007. Spain was a notable exception, however, due to heavy net migration out of the country.

Immigration boosts Germany's economy

Fear and anger aren’t just election-winning tools in the United States. In Germany too, the increasing popularity of right-wing parties shows that fears about crime and job losses as a result of immigration are finding fertile ground. EURACTIV Germany reports.

Lower unemployment, but inflation still weak

Eurozone economic growth is gaining momentum and the rapid fall in the unemployment rate is encouraging but inflation has yet to show convincing signs of a sustained upward trend, requiring continued stimulus, the bulletin informed.

The firming of the euro also presents a source of risk for inflation because it implies a moderation of price pressures, requiring monitoring, the ECB said in a regular economic bulletin that was largely consistent with its statement after this month’s interest rate decision.

The ECB earlier this month left its ultra-easy monetary policy unchanged but said it would discuss “recalibration” next month, a signal taken by markets as confirmation that the bank would curb its stimulus from next year, given strong growth and a waning threat of deflation.

“The swift decline in euro area unemployment is particularly encouraging against a background of increasing labour supply,” the ECB added. “Nevertheless, broader measures of unemployment suggest that slack is still elevated in many euro area labour markets.”

Falling youth unemployment is not a reason for complacency

Europe needs to better integrate young people into the labour market if it is to address youth unemployment effectively, writes Denis Pennel.

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