As the EU’s population nears its historic peak, the debate over migration’s role in Europe’s economic future is intensifying. Jasmijn Slootjes, Deputy Director of the Migration Policy Institute Europe, walks us through what the evidence actually shows, and where Europe is leaving economic potential on the table.

The Joint Research Centre’s (JRC) July 2026 demography report found that the EU’s population is at its peak today, at 450.6 million. From now on, it will shrink, with projections of its decline to 398.8 million by 2100. With a decline of nearly 12 per cent, this would bring Europe back to the population level of the 1970s. Most concerningly, by 2050, almost one in three Europeans will be 65 or older, up from one in five today. 

While the workforce is contracting fast, Europe is turning to skilled migration, which is already helping plug the gaps. To figure out what role migration will play in Europe’s economic and demographic future, EU Perspectives put questions to Ms Slootjes — on labour shortages, fiscal contribution, the integration gap, and why Europe still attracts only a fraction of the high-skilled talent that Canada and Australia do.

The European Commission says that migration can ease the pace of ageing, and that the priority should stay on upskilling people already in the EU. How do you see the immigration question in relation to Europe’s economic and demographic future? Should Europe be trying to attract more migrants, better utilise the overlooked immigrants already within the EU, or both?

Both are necessary, but they solve different problems on different timelines. Migration slows the pace of ageing and cushions labour-force decline. The JRC’s 2026 demography report finds that a zero-net-migration scenario would leave the EU population 32 per cent smaller and the old-age dependency ratio 12 percentage points higher by 2100 than under the migration-inclusive baseline. But migration cannot reverse the underlying shift in age structure. Settled migrants age too, and their fertility converges toward host-country norms over generations. It is adaptation, not reversal, of demographic trends.

Refugees overall perform less well on employment. But net fiscal contribution is not the purpose of admitting refugees; humanitarian protection is.

On the labour-market side, the two levers are complementary rather than competing. Non-EU-born workers already absorbed roughly 65 per cent of all EU jobs created between 2019 and 2023 (2.7 of 4.2 million), filling shortages even in high-skill sectors such as health and ICT. This is evidence that inflows are working.

Yet 40 per cent of tertiary-educated non-EU nationals are stuck in jobs below their qualification level. So a large reserve of underused skill already sits inside the EU. Better leveraging this untapped potential, including those currently unemployed, would make a significant difference.

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The challenges the EU faces therefore call for a broad package of policy tools: bringing in new labour migrants, leveraging the untapped potential of migrant (and non-migrant) labour and skills, raising the retirement age, and more.

Most fiscal studies I’ve looked at say migration is a net economic positive, but only where integration succeeds. Where does Europe fall in this conversation, and what should be done to give it the best chance of success?

The EU sits closer to the “positive but underperforming on integration” end of the spectrum. Net fiscal contributions from migrants are rising over time. Under current demographic and migration trends, the net contribution of the average extra-EU migrant could eventually surpass that of the average native. Intra-EU migrants are already the strongest net fiscal contributors across their life-cycle.

Integration has reached a record high, with EU immigrant employment rates hitting 65.3 per cent. Yet that positive aggregate masks a persistent integration shortfall: the non-EU migrant rate still trails both the native rate (71.4%) and the EU-migrant rate (74.9%), with the gap driven mainly by low female non-EU employment. Add the horizontal and vertical skill mismatches noted above, and it’s clear the fiscal upside is not being fully realised.

What would improve outcomes: faster, mutually trusted qualification recognition; targeted labour-market activation for non-EU women; language and credential-bridging programmes; and stronger employer-side matching. It’s also often overlooked that integration policies help make EU countries a more attractive destination for highly skilled migrants and play a key role in retention, an issue receiving increasing attention from policymakers.

One side point: a significant share of migrants admitted to the EU are refugees, who receive status on humanitarian grounds under international and EU law. While figures vary by sub-group, refugees overall perform less well on employment and net fiscal contribution.

But it’s important to weigh the difficult conditions they experienced: limited educational infrastructure in the country of origin, and war or time spent in refugee camps often interrupting or preventing education. Net fiscal contribution is not the purpose of admitting refugees; humanitarian protection is. Optimising fiscal contribution matters, not least to sustain public support for refugee reception, but it is not the primary objective at the point of admission.

The EU attracts only about 20 per cent highly qualified migrants, against 56 per cent in Canada and 41per cent in Australia. How do you explain this?

The core explanation is structural, not cultural. Canada and Australia run explicit points-based, skills-selective immigration systems designed from the outset to filter for human capital. Whereas most EU entry channels—family reunification, asylum, intra-EU free movement, and, to a lesser degree, fragmented national labour-migration schemes—are not primarily mechanisms for selecting on skill level.

The EU does have a single, harmonised “front door” for skilled third-country talent, the EU Blue Card. But national variations in implementation and limited uptake constrain what it could deliver. Its unique selling points, allowing holders to change employers and move between EU countries, are also what disincentivises member states and employers from offering and advertising it, even though it would benefit the EU as a whole in the competition for global talent.

Individuals with an Arab, Maghrebi, or Middle-Eastern-sounding name have a 40 per cent lower chance of being invited to a job interview than those with a Western-sounding name, despite identical CVs.

Many practical obstacles compound the problem: fragmented national and EU labour visas, long and uncertain application times, bureaucratic hurdles, qualification-recognition barriers, and language barriers (English being a more commonly spoken foreign language globally than most EU languages).

One point worth flagging: recent workforce data points to a reversal in the transatlantic migration of tech talent, with more tech workers now moving from the United States to Europe than the other way around. This likely reflects the cooling US tech labour market, burgeoning tech ecosystems across Europe, and restrictive US immigration and visa policies. The EU’s broader attractiveness—better work-life balance, strong social welfare systems, and robust democratic and human-rights traditions—should not be overlooked, especially amid current US political developments.

What is the most significant binding constraint the EU can overcome in getting migrants into work that matches their skills?

The key factors shaping labour-market integration are persistent discrimination, obstacles to skills and qualification recognition, and geographic skills mismatches across the EU.

On discrimination, a meta-analysis of a wide range of experimental studies found that individuals with an Arab, Maghrebi, or Middle-Eastern-sounding name have a 40 per cent lower chance of being invited to a job interview than those with a Western-sounding name, despite identical CVs. In other words, a foreign name alone can cut the odds of an invitation by two-fifths.

Qualification and credential recognition is the single most cited bottleneck. JRC and EURES data converge here: around 40 per cent of tertiary-educated non-EU nationals work below their qualification level, and this mismatch shows little improvement in recent years despite the shortages being real. The causes are many, but improved skills and qualification recognition, from micro-credentials to international agreements on shared requirements, alongside targeted up- and reskilling could play an important role in closing the gap.

This is compounded by a mislocation problem rather than a scarcity problem: nearly every shortage occupation in one EU country has a surplus in another (98 per cent overlap), and 57 per cent of shortages are medium-to-high severity (EURES 2025 shortage report). That means intra-EU labour mobility and cross-border recognition, not just external admission, are the binding constraint.

Does the Union of Skills agenda actually address the under-utilisation problem, or is it aimed elsewhere? And can it work in tandem with the EU Talent Pool?

The Union of Skills specifically targets facilitating “the attraction and integration of skilled third-country nationals”. It mentions revising the EU Action Plan on Integration and Inclusion, which should cover the period from 2028 onwards. But it focuses on labour migrants and their family members, not on migrants already present in the EU. That is a missed opportunity. 

Moreover, migrant-integration policy is a national competence: the EU can set priorities, steer through funding instruments such as AMIF, and facilitate the sharing of best practices via its EU Integration website and the European Integration Network, but there are limits to what it can achieve. It will fall to national governments to fully leverage the potential of integration (Union of Skills, p. 16).

That said, the Union of Skills does treat up- and reskilling as important tools, which could also benefit the labour-market integration of migrants already in the EU. So far it does not specifically target this group, which faces distinct barriers—labour-market discrimination (demonstrated through repeated experimental studies), linguistic barriers, and skills-recognition barriers—that may differ from those facing EU-born individuals.

The EU Talent Pool is not aimed at underutilised talent within the EU; it focuses on better matching employers and vacancies with foreign talent from outside the EU. For those already in the EU, there is the similar and longer-established EURES platform. So while better matching of supply and demand for skills (EU and non-EU) and the Union of Skills are complementary in addressing shortages, the EU Talent Pool is not complementary in addressing the underutilised talent of migrants already in the EU.