A changing European labour market: the role of immigration and new jobs
Active training policies, as well as the ability to attract talent in sectors with the greatest shortage of skilled personnel, will be key if the EU is to make progress in innovation and competitiveness and avoid falling behind its main competitors.
In an environment of slowing economic activity following the pandemic, employment in the EU has continued to grow with some vigour and has increased by 7.2 million people since 2019. As a result, the unemployment rate has continued to decline, reaching a record low of 5.7%. Given this low unemployment, and in contrast to the pre-pandemic period, most of the job growth in recent years is explained by the increase in the labour force, mainly via non-EU immigration and increased participation among women and older workers. At the same time, the acceleration of the digital transformation has made the technology sectors the main source of job creation in recent years, in contrast to the decline in manufacturing. Active training policies, as well as the ability to attract talent in sectors with the greatest shortage of skilled personnel, will be key if the EU is to make progress in innovation and competitiveness and avoid falling behind its main competitors.
The main labour market indicators have shown constant improvement in recent years: the participation rate rose to 80.4% in 2024 (77.9% in 2019), the employment rate to 75.8% (72.7% in 2019) and the unemployment rate fell to 5.7% (6.6% in 2019). This favourable trend has also benefited groups that are traditionally more vulnerable, such as women, whose participation rate has risen to 70.5% (3.7 pps more than in 2019) and who account for 64% of the total number of jobs created since 2019 (3.9 million jobs). This pattern has also been replicated among older workers (aged 55 to 64), for whom the activity rate has climbed to 60.8% in 2024 (an increase of almost 6 points compared to 2019) and who account for 20% of all those in employment (just over 40 million workers).
Special mention should be made of the contribution of the foreign population to the positive labour market dynamics, in a context of an ageing population and low productivity growth. Specifically, just over 50% of the jobs created between 2019 and 2024 were occupied by workers from outside the EU (around 3.4 million), despite the fact that they accounted for just 6.6% of the European labour force in 2024 (5.0% in 2019) (see first chart). A significant proportion of the increased growth since 2022 is attributed to the influx of Ukrainian citizens as a result of the war with Russia. Indeed, over four million Ukrainians have settled abroad, with Poland and Germany being the main recipients, accounting for 37% and 25% of the total, respectively.
In a recent study, the ECB quantified the contribution of non-EU immigration to GDP growth and cited the growth of the foreign working-age population and its higher employment rate as the main factors behind the increase in economic activity in the euro area in 2023 and 2024.1 However, this contribution varies widely from country to country. In Italy, for instance, the impact has been smaller, since it had a starting point with lower participation rates and it is the national population that has driven the country’s economic growth. In contrast, in Germany, which has a higher activity rate, foreign workers have mitigated the effects of population ageing and the decline in the working-age population. Spain lies somewhere in the middle, with immigration playing a key role in labour dynamics, but with nationals also making a positive, albeit more moderate, contribution.2
Another positive aspect of the influx of the foreign population in recent years is linked to the fact that the extent of their over-qualification (and the gap which still persists with respect to domestic workers) has been narrowing noticeably.3 This trend could be explained by the increased recognition of studies carried out abroad, the improvement in access to more qualified jobs that are better suited to immigrants’ level of educational or active labour integration policies.4
- 1. See https://www.ecb.europa.eu/press/blog/date/2025/html/ecb.blog20250508~897078ce87.en.html.
- 2. In a recent article, the Bank of Spain analyses the factors that influence migratory flows to our country and other advanced economies and shows how, among advanced countries, Spain has one of the highest inflows of foreigners per thousand inhabitants. The reason for this increase is primarily the situation in the countries of origin (political instability or natural disasters, among others), although the characteristics of the destination country (opportunities for finding work, language or the existence of compatriots already settled in the destination country) are becoming increasingly important.
- 3. Over-qualified workers are people with a higher level of education who work in low- or medium-skilled occupations. See Migrant integration statistics - over-qualification - Statistics Explained - Eurostat.
- 4. As in the case of the Integration durch Qualifizierung, which aims to improve the labour integration of migrants in Germany and provides support through the certification of professional qualifications, additional training and personalised guidance.
The growth of employment since 2019 has been widespread across the various sectors, with the exception of the primary sector (which is merely a continuation of the downward trend observed since the 1990s) and manufacturing, which has not yet recovered its pre-pandemic employment levels and has almost half a million fewer workers today than it did in 2019. At the other end of the spectrum, employment growth has been particularly strong in the information and communications technology (ICT) sector, with a 21.4% increase since 2019 (1.3 million jobs) (see second chart).
This buoyancy is closely linked to the acceleration of the digital transformation (it now employs over 7.5 million workers, 3.5% of the total number of people in employment in Europe). However, as is the case in other sectors,5 it is not immune to the shortage of skilled labour which, although reduced from its peak, remains very high (see third chart). The gap between the demand for workers with digital skills and their supply has become a bottleneck for the advancement of innovation and competitiveness in the EU. Although progress has been made in training and in attracting professionals with the necessary skills, the EU is still far from reaching its goal of 20 million ICT specialists by 2030. Therefore, more must be done to bolster training in this sector and to attract talent, given that the ICT sector is expected to continue to be one of the hotspots for growth over the coming years.
- 5. Labour shortages are found across a variety of occupations and sectors, such as within the health system, drivers, electricians, cooks, waiters and construction workers, among others. The European Commission has identified 42 professions with this problem: EUR-Lex - 52023PC0716 - EN - EUR-Lex.
Since the pandemic, the EU labour market has shown remarkable buoyancy, with employment growth largely driven by non-EU immigration and increased labour participation, both in general and particularly among the groups with lower participation rates, such as women, young people and those over 55 years of age. However, the EU faces major challenges over the coming years. The ageing of the population, low birth rates and a shortage of skilled labour – especially in key sectors such as technology, health and construction – are obstacles to economic growth. Despite advances in the integration of immigrants into the labour force and in digital training, a significant gap persists between supply and demand when it comes to skills. Overcoming these challenges will require active training policies, attracting talent and adapting the labour market to new demographic and technological realities. It is precisely these challenges that are the core focus of the Union of Skills.6 As one of the five levers of the EU Competitiveness Compass, presented in March 2025, this project aims to achieve a profound transformation of education and training systems in order to ensure a well-prepared workforce. Although its implementation will be challenging, its success will be decisive for the EU’s economic future.
- 6. See https://commission.europa.eu/topics/eu-competitiveness/union-skills_en.
- 1. See https://www.ecb.europa.eu/press/blog/date/2025/html/ecb.blog20250508~897078ce87.en.html.
- 2. In a recent article, the Bank of Spain analyses the factors that influence migratory flows to our country and other advanced economies and shows how, among advanced countries, Spain has one of the highest inflows of foreigners per thousand inhabitants. The reason for this increase is primarily the situation in the countries of origin (political instability or natural disasters, among others), although the characteristics of the destination country (opportunities for finding work, language or the existence of compatriots already settled in the destination country) are becoming increasingly important.
- 3. Over-qualified workers are people with a higher level of education who work in low- or medium-skilled occupations. See Migrant integration statistics - over-qualification - Statistics Explained - Eurostat.
- 4. As in the case of the Integration durch Qualifizierung, which aims to improve the labour integration of migrants in Germany and provides support through the certification of professional qualifications, additional training and personalised guidance.
- 5. Labour shortages are found across a variety of occupations and sectors, such as within the health system, drivers, electricians, cooks, waiters and construction workers, among others. The European Commission has identified 42 professions with this problem: EUR-Lex - 52023PC0716 - EN - EUR-Lex.
- 6. See https://commission.europa.eu/topics/eu-competitiveness/union-skills_en.
Demographics
How does demographics affect economic growth, the reallocation of the model of production, the labour market and productivity?
