Integrating immigrants: A solution to Europe's demographic challenges

Europe is on the brink of a demographic shift, with its population set to decline in many countries due to an aging populace and a falling birth rate. A recent study highlights that the integration of immigrants into the workforce is essential for sustaining both societies and economies across the continent.

Europe's population is changing

According to projections from the European Union, the population is expected to steadily decrease from 2026 as birth rates fall and immigration fails to compensate for this decline. However, these trends will vary significantly between different regions of Europe.

David Pinkus, an affiliate fellow at Bruegel, an economic policy think tank based in Brussels, notes that by 2050, an estimated 35 percent of the EU population will be over 65 years old, compared to just 21 percent in 2022. This shift brings with it considerable social policy challenges, particularly regarding long-term care for the elderly.

Four groups of countries

In their analysis, Pinkus and his co-author, Nina Ruer, categorized EU nations into four distinct groups based on their immigration histories. Western Europe, which includes Austria, Germany, France, Belgium, the Netherlands, Luxembourg, and Ireland, along with Northern Europe—Denmark, Sweden, and Finland—transitioned from emigration to immigration hubs in the 1950s.

Conversely, Southern Europe, encompassing Italy, Spain, Portugal, Greece, Cyprus, and Malta, experienced significant immigration beginning in the 1990s but faced a resurgence of emigration following the 2008 financial crisis. Meanwhile, Eastern European nations, such as Poland, Czechia, Slovakia, Hungary, and the Baltic states, were largely closed to migration during the Cold War and have since seen significant emigration after joining the EU.

“Natural population change will be negative across all four groups, yet net migration is expected to be positive,” Pinkus remarked. Nevertheless, countries in the east and south will still experience overall population declines due to high natural losses combined with varying migration patterns.

Sweden's population growth

On a national level, several countries, including Austria, Spain, Sweden, Belgium, Cyprus, Ireland, Luxembourg, Malta, and the Netherlands, are projected to experience population growth by 2050. Notably, Sweden, Ireland, Luxembourg, and Cyprus are expected to see natural population growth during this period, while net migration is anticipated to increase across most countries, with a few exceptions.

France and Germany are expected to hover near net-zero population growth, while other EU nations will face declines.

Aging population

The aging of Europe’s population presents further challenges. By 2050, the proportion of individuals aged 85 and older is projected to more than double, rising from 3 percent to 6 percent, with expectations of reaching nearly 8 percent by 2070. This demographic trend necessitates increased resources for pensions and long-term care, placing additional pressure on a shrinking workforce.

Smaller labor force

The report indicates that 22 out of 27 EU countries will witness a decrease in their working-age population from ages 20 to 64. Additionally, the number of individuals under 20 is anticipated to decline, except in select countries like Sweden, Malta, and Luxembourg. This demographic imbalance could lead to labor market disruptions, which might be mitigated by extending working life, increasing female workforce participation, and enhancing immigration.

Policy changes

The authors of the study argue that maintaining a stable labor force is crucial for preserving existing economic and social structures in Europe. Most EU governments and the European Commission share this perspective. To address these challenges, the authors suggest that Western and Northern European countries implement policies aimed at facilitating the integration of immigrants into the labor market, while also focusing on rural development.

Southern European nations should enhance family-friendly policies and improve infrastructure to support young people and immigrant integration. Eastern European countries must prioritize talent retention, attract immigrants to sectors facing labor shortages, and promote work-life balance to increase participation from women and older workers.

Furthermore, pension reforms and the recruitment of more professionals into the long-term care sector are essential. Pinkus emphasizes that the long-term care system currently relies heavily on informal care, predominantly provided by women within families. To alleviate this pressure, increased support for informal caregivers and a shift away from dependence on informal care are paramount.