EU study says worker shortages will make migration a necessity
The European Union has warned that a rapidly ageing population will shrink the workforce by 2038, making immigration an economic imperative to fund expanding care sectors.
The European Union published its third-ever demographics study on Tuesday, warning that residents aged 20 to 40 will be outnumbered by those over 65 by 2038. By 2050, a third of all Europeans are projected to be of retirement age. This rapid ageing threatens to contract the bloc's labour force at a scale that will force structural economic changes.
The shift is driven by a sharp decline in births alongside steadily rising life expectancy. Births have nearly halved since 1961, falling from 6.8 million to 3.55 million in 2024. By 2100, life expectancy is projected to reach 90 years for women and 86 years for men.
For businesses and investors, this transition demands preparation for a "longevity economy". As the proportion of retirees grows, capital and labour will need to be broadly redirected toward care facilities. The study highlights an urgent need to reform pension systems, noting that without adjustments, more countries risk following France's current trajectory, where the average worker earns less than a pensioner.
Such demographic imbalances threaten to constrain economic growth, shrink the available talent pool, and place a heavier tax burden on a smaller working-age population. Companies will face tighter labour markets, potentially driving up wages in certain sectors while straining the fiscal policies needed to support public services.
To sustain the workforce, the EU is pointing to immigration. European commissioner Dubravka Šuica stated that migration is now “a necessity” in combatting these shortages, noting that those looking to emigrate to the EU are typically of working age. “As fertility rates decline, migration has become an important driver of population change, counterbalancing the negative effects of population ageing and labour force contraction,” the report reads.
The commission does note, however, that migrant fertility levels tend to converge with those of their host country over time. This means that while migration can serve as an immediate economic buffer, it cannot entirely reverse the long-term demographic trajectory facing European markets.
