As the Donald Trump administration in the United States intensifies pressure on immigrants and locks down border security, opposing voices have emerged in Europe.
Christine Lagarde, the president of the European Central Bank (ECB), stated during the annual economic symposium Jackson Hole Meeting held on Aug. 24 (local time) in Jackson Hole, Wyoming, that "the European economy cannot grow without immigrants." According to the Financial Times (FT) and others, President Lagarde noted that "the key driver that allowed the European economy to withstand various shocks after the pandemic was the influx of foreign workers."
He made it clear that the reason the eurozone economy could avoid stagnation despite surging energy expenses due to the war in Ukraine and record inflation post-endemic is thanks to immigrants.
President Lagarde cited specific figures. In 2022, foreign workers accounted for about 9% of the total labor force in the eurozone. However, considering only the increase in the labor force over the past three years, immigrants filled half of this gap. He stated, "Without the contributions of foreign workers, the labor market in the eurozone would have been much tighter, and production levels would have decreased."
Notably, Germany, which has the largest economic share in the eurozone, estimated that without immigrant labor, the current gross domestic product (GDP) would have been 6% lower compared to 2019. The background for Spain, which experienced a national debt crisis during the global financial crisis and recorded an economic growth rate of over 3% last year, is also attributed to foreign workers. The Spanish think tank EsadeGeo reported that "more than 71% of the 1.9 million jobs created in Spain between 2019 and 2024 have been filled by foreign-born workers."
This phenomenon is not limited to Europe. Central bank governors of developed countries around the world have uniformly identified "immigration" as a key variable for economic growth. At the same symposium, Kazuo Ueda, the governor of the Bank of Japan, diagnosed that "the labor shortage is the most urgent issue facing the Japanese economy." Japan has also filled its labor shortfall with foreign workers. According to the Nihon Keizai Shimbun, foreign workers, who make up only 3% of the labor population, account for half of the recent increase in Japan's labor force. Andrew Bailey, the governor of the Bank of England (BOE), warned, "By 2040, 40% of the UK population will be non-working individuals," highlighting the worsening labor shortage post-Brexit.
The fundamental reason developed countries rely on immigrants is widely known: low birth rates, an aging population, and changing job preferences. President Lagarde analyzed that "immigration played a crucial role in offsetting the decline in the birth rate and the preference for reduced working hours in Europe." He explained that immigrants fill gaps in essential sectors such as construction, hospitality, and transportation that locals shy away from, thereby increasing overall economic efficiency. This process has led to the emergence of a virtuous cycle in the labor market, where locals move into high-value, high-skilled occupations.
However, while Europe recognizes that immigrants provide significant economic assistance, it is also plagued by constant discord due to political and social rifts. In various European countries, far-right parties have been expanding their influence following an increase in immigrant inflows. The Alternative for Germany (AfD) and the National Union (RN) in France are provoking anti-immigrant sentiments and expanding their support.
Social conflicts, cultural differences, and increasing burdens on public services arising from the integration of immigrants are also tasks that need to be solved at the national level. The International Monetary Fund (IMF) indicated that substantial financial costs equivalent to about 0.2% of the GDP of the receiving country may occur in the early stages of large-scale immigration influx. Based on Korea's gross domestic product of $1.713 trillion last year, about 4.75 trillion won would need to be invested. Despite significant investments already made by European countries, they are unable to keep pace with the increasing rate of immigration, leading to housing shortages and overburdened education systems. President Lagarde also expressed concern that "political pressure could limit the influx of immigrants," emphasizing that managing social conflicts while maintaining economic benefits is crucial.
In particular, the recent changes in U.S. immigration policy are expected to become a new variable for European immigration-related policies. Political media outlet Politico reported that as the Trump administration raises the immigration threshold, including for high-skilled talents, there is a possibility that these individuals may turn their direction toward Europe. While Europe has the opportunity to secure quality labor, it also faces the increased burden of managing social tensions resulting from a surge in immigrants. Therefore, experts predict that countries in Europe will widen their immigration gates while applying strict assessment criteria and strengthening social integration programs through a "selective immigration" policy.