Older workers, migrants drive euro area labor force expansion
The euro area labour force has expanded significantly in recent years, driven by rising participation rates, demographic shifts, and sustained net migration. Older workers and migrants have been the two most important sources of this expansion.
Expansion fuels economic activity
The euro area labour force has expanded rapidly over the past five years, rising by 7.8 million since the fourth quarter of 2019 and reaching 173 million in mid-2025.
This increase is substantial compared to the previous decade's trend.
The growth stems from a 5.8 million increase in the working-age population and a rise in the labour force participation rate from 64.6% to 66.2%.
Foreign workers account for most of the population increase.
This expansion has been a crucial factor supporting GDP growth, contributing over half of GDP growth in most quarters since Q3 2021.
The post-pandemic recovery has been unusually labour-intensive, relying more on employment growth than productivity gains, though productivity recovered in 2024-2025.
Older, skilled, and foreign workers
Since 2019, the euro area labour force has shifted towards older and highly skilled workers.
The 55-74 age group increased by over 20%, and tertiary-educated workers rose by nearly 20%.
Participation rates for older workers and women also increased, narrowing the gender gap.
Despite population ageing, the labour force's share of the total population has remained stable, supported by these trends and sustained net migration.
Foreign workers, predominantly from non-EU countries, have been a crucial driver, contributing over half of labour force growth in the past four years, adding 4.2 million workers.
Their share in the total labour force has risen to 10%, reflecting strong inflows and higher participation rates.
Navigating the new labor landscape
The changing labour force composition offers a critical buffer against demographic headwinds, supporting economic growth when productivity is subdued.
However, the reliance on older workers and migrants, while beneficial, raises questions about long-term dynamism and entrepreneurship.
Policymakers must address structural barriers and foster integration to fully leverage these shifts and mitigate potential productivity drags.
Source: Drivers of the labour force in the euro area
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