By Paul Hannon

Lengthening working lives are helping to support growth in the eurozone even as the population ages, but immigration is essential if the economy is to continue to expand over coming years, the European Central Bank said Wednesday.

In a report on the workforce, economists at the ECB calculated that rising employment has accounted for about half of the growth recorded in the eurozone since the third quarter of 2023, while gains in output per worker have been modest.

That rise in employment has partly been driven by an increased share of older Europeans remaining in work, and the ECB said that is likely to continue as the bloc catches up with behavior in the U.S. and Japan.

But there will come a time when that trend reaches a limit, and all the older Europeans who can work are working. As that point nears, growth would be reliant on bringing in workers from outside the currency area, or improved output per worker, or a combination of the two.

"Migration and technological advancement are therefore essential to help mitigate the economic impact of population aging," the ECB's economists wrote.

The report comes as anti-immigrant political parties have gained an increased share of votes in recent elections across Europe, and many governments have responded by placing tighter limits on immigration, although most still seek to attract highly-skilled workers from overseas.

The ECB's economists said the outlook for migration is unclear.

"Geopolitical developments and policy choices are creating significant uncertainty around migration flows," they wrote.

Declining fertility rates over recent decades have led to an aging of Europe's population, a trend that is set to continue.

But the economists calculate that the number of people in work across the eurozone increased by 7.8 million from late 2019 to stand at 173 million in mid-2025, driven in part by an increased share of older Europeans continuing to work.

Figures released Wednesday showed the number of people in work rose again in the first three months of 2026, by 172,000, supporting a modest increase in economic output.

The rise in the share of older people in work has been driven by later retirement. While increases in the legal retirement age have sparked protests in parts of Europe, the ECB's economists found that was not the main factor behind an average increase in working lives of six months.

"Recent changes in statutory retirement ages appear to have played only a limited role in driving later retirements," they wrote.

There is room for the participation rate of older Europeans to increase further. The ECB calculates that while workers aged 65 years and above account for just 3% of the eurozone's labor force, the equivalent rates in the U.S. and Japan are 7% and 14% respectively.

However, that can't continue indefinitely.

"Persistently low fertility rates are continuing to shrink the share of younger cohorts entering the labour force, meaning that the current rise in the participation of older workers offers only transitional offsetting of the longer-term demographic drag," the economists wrote.

Migrants were the other big contributor to the rise in employment. Between 2021 and 2025, their share of the labor force rose to 10% from 8%, an increase of 4.2 million workers.

The arrival of large numbers of Ukrainians fleeing the Russian invasion has been one source of new workers, while Spain has seen a significant increase in arrivals from Latin America. Should the war on Ukraine come to an end, many of those Ukrainians may choose to return home.

Should immigration decline, there may be an alternative, but far from certain, source of growth.

"The adoption of AI and automation technologies have the potential to boost economic growth and partly offset the demographic decline," the ECB's economists wrote.

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

May 13, 2026 08:14 ET (12:14 GMT)

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