A jump in the share of foreign-born workers after the COVID-19 pandemic helped Europe bring inflation down without sharply slower growth, European Central Bank (ECB) President Christine Lagarde said on Saturday.
A key factor “has been the rise in both the number and participation rate of foreign workers,” Lagarde said in a speech in Jackson Hole, Wyoming, at a US Federal Reserve economic symposium. “In Germany, for example, GDP would be around 6 percent lower than in 2019 without the contribution of foreign workers.”
Spain’s strong post-COVID-19 pandemic economic growth “also owes much to the contribution of foreign labor,” she said.
Photo: AP
Lagarde’s remarks echoed a common view among economists that an influx of foreign workers helped companies expand their output and meet a spike in demand after the pandemic that followed stimulus benefits.
The increased supply helped bring down inflation in Europe and the US. Yet the rise in immigration also sparked a political backlash in both economies.
“Migration could, in principle, play a crucial role in easing” labor shortages as native populations age, Lagarde said, but “political economy pressures may increasingly limit inflows.”
Lagarde also said that a drop in inflation-adjusted wages, greater hoarding of workers by companies, and an influx of elderly people into the labor force also contributed to steady economic growth even as the ECB lifted interest rates.
Historically, higher borrowing costs have dragged down economic growth, often causing recessions and leading to higher unemployment. Yet that did not happen as the ECB raised its key rate in 2022 and 2023, she said.
While foreign-born workers accounted for just 9 percent of the EU’s labor force in 2022, they have made up half of the bloc’s labor force growth in the past three years, Lagarde said.
More elderly people also joined the workforce, Lagarde said. Without that increase, the unemployment rate in the 20 countries that use the euro would be elevated — 6.6 percent, rather than the current rate of 6.3 percent, she said.
Bank of Japan Governor Kazuo Ueda spoke on the same panel at Jackson Hole and cited a similar trend in Japan since the pandemic.
While the foreign-born make up just 3 percent of the workforce, they have made up half of recent workforce growth, he said.
Japan’s population dropped for a 14th straight year last year, Japanese Ministry of Internal Affairs and Communications data showed. Japan also has one of the oldest populations in the world, with almost 30 percent of residents aged 65 or older.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, booked its first-ever profit from its Arizona subsidiary in the first half of this year, four years after operations began, a company financial statement showed. Wholly owned by TSMC, the Arizona unit contributed NT$4.52 billion (US$150.1 million) in net profit, compared with a loss of NT$4.34 billion a year earlier, the statement showed. The company attributed the turnaround to strong market demand and high factory utilization. The Arizona unit counts Apple Inc, Nvidia Corp and Advanced Micro Devices Inc among its major customers. The firm’s first fab in Arizona began high-volume production
VOTE OF CONFIDENCE: The Japanese company is adding Intel to an investment portfolio that includes artificial intelligence linchpins Nvidia Corp and TSMC Softbank Group Corp agreed to buy US$2 billion of Intel Corp stock, a surprise deal to shore up a struggling US name while boosting its own chip ambitions. The Japanese company, which is adding Intel to an investment portfolio that includes artificial intelligence (AI) linchpins Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), is to pay US$23 a share — a small discount to Intel’s last close. Shares of the US chipmaker, which would issue new stock to Softbank, surged more than 5 percent in after-hours trading. Softbank’s stock fell as much as 5.4 percent on Tuesday in Tokyo, its
COLLABORATION: Softbank would supply manufacturing gear to the factory, and a joint venture would make AI data center equipment, Young Liu said Hon Hai Precision Industry Co (鴻海精密) would operate a US factory owned by Softbank Group Corp, setting up what is in the running to be the first manufacturing site in the Japanese company’s US$500 billion Stargate venture with OpenAI and Oracle Corp. Softbank is acquiring Hon Hai’s electric-vehicle plant in Ohio, but the Taiwanese company would continue to run the complex after turning it into an artificial intelligence (AI) server production plant, Hon Hai chairman Young Liu (劉揚偉) said yesterday. Softbank would supply manufacturing gear to the factory, and a joint venture between the two companies would make AI data
DOLLAR SIGNS: The central bank rejected claims that the NT dollar had appreciated 10 percentage points more than the yen or the won against the greenback The New Taiwan dollar yesterday fell for a sixth day to its weakest level in three months, driven by equity-related outflows and reactions to an economics official’s exchange rate remarks. The NT dollar slid NT$0.197, or 0.65 percent, to close at NT$30.505 per US dollar, central bank data showed. The local currency has depreciated 1.97 percent so far this month, ranking as the weakest performer among Asian currencies. Dealers attributed the retreat to foreign investors wiring capital gains and dividends abroad after taking profit in local shares. They also pointed to reports that Washington might consider taking equity stakes in chipmakers, including Taiwan Semiconductor
RSS