JACKSON HOLE (Realist English). At the annual gathering of leading policymakers in Jackson Hole, the heads of the Bank of Japan, the European Central Bank, and the Bank of England warned that the world’s largest economies will face labor shortages and inflationary pressures in the coming decades unless they attract more foreign workers.
Bank of Japan governor Kazuo Ueda described labor shortages as “one of the most pressing” issues for his country. While foreign workers make up only 3 percent of Japan’s labor force, he noted, they have accounted for half of recent growth. “Further increases will surely require a broader discussion,” Ueda said.
ECB president Christine Lagarde stressed that without immigration, the euro area will lose 3.4 million working-age people by 2040. “Although they represented only around 9 percent of the labor force in 2022, foreign workers accounted for half of its growth over the past three years,” she said.
Bank of England governor Andrew Bailey called demographic pressures and falling productivity an “acute” challenge for the UK. By 2040, he said, 40 percent of the British population will be older than working age. He also pointed to a sharp decline in youth employment and a rise in the number of people classified as “long-term sick,” highlighting mental health as the most common reason.
Economists caution that unless countries open up to more immigration, aging populations will reduce output, raise costs, and fuel inflation.
