For decades, immigration has been a polarizing topic in politics and society. But in the halls of global policymaking, from central banks to ministries of labor, one fact has become unavoidable: rich economies cannot sustain growth without foreign workers.
The latest warnings emerged at the 2025 Jackson Hole economic symposium, where leaders from across the globe confronted a sobering reality. Aging populations, shrinking birth rates, and slowing labor force growth are converging to threaten economic stability. For developed economies in North America, Europe, and Asia, the solution may lie in policies that encourage—not restrict—immigration.
Despite political resistance in many countries, foreign workers are increasingly essential to keeping economies competitive, filling critical shortages, and maintaining balance in pension and healthcare systems that depend on younger labor contributions.
The Demographic Squeeze
Aging Populations, Shrinking Workforces
- In the United States, nearly 10,000 Baby Boomers retire daily. By 2035, older adults will outnumber children for the first time in history.
- In the European Union, projections show a loss of 3.4 million working-age adults by 2040, while the share of citizens over 65 will rise to nearly 30%.
- Japan already has one of the world’s oldest populations: more than one in four citizens is over 65.
Declining Fertility Rates
Virtually all developed economies face fertility rates below the replacement threshold of 2.1 children per woman. This demographic drag ensures that without inward migration, population decline—and thus economic contraction—will accelerate.
Why Immigration is an Economic Necessity
1. Labor Market Stability
Foreign workers often take roles that domestic workers either cannot or will not fill—ranging from elder care and agriculture to high-tech fields. Without these contributions, industries face bottlenecks and rising costs.
2. Productivity and Innovation
Studies consistently show that immigrant workers boost productivity. Immigrant-founded companies, particularly in tech and biotech, have delivered disproportionate economic growth.
3. Fiscal Sustainability
Social security and pension systems in rich economies rely on a steady inflow of younger workers paying taxes. Immigration helps offset the rising ratio of retirees to workers.
4. Global Competitiveness
As emerging markets like India and Nigeria expand their working-age populations, rich economies that resist immigration risk losing competitiveness by failing to harness global talent.
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Japan: Reluctant but Dependent
Japan has historically been resistant to large-scale immigration. Yet in recent years, policymakers have quietly expanded visa categories. Today, foreigners make up just 3% of Japan’s workforce—yet they account for half of recent job growth. As the country faces a declining birth rate, the necessity of foreign workers is becoming undeniable.
Europe: Balancing Politics and Demographics
The European Union projects steep labor shortages, particularly in Germany, Italy, and Spain. However, anti-immigration sentiment remains high. The political challenge is to reconcile public resistance with economic imperatives. Without migration, Europe risks slower growth and fiscal strain.
United Kingdom: Post-Brexit Paradox
The UK tightened immigration rules after Brexit, but now faces labor shortages in healthcare, agriculture, and hospitality. By 2040, one in three adults is expected to be retired, highlighting the urgent need for foreign workers.
United States: Immigration Gridlock
The U.S. economy has long relied on immigrant labor, from Silicon Valley engineers to agricultural workers. Yet policy gridlock has stalled reforms. Without adjustments, economists warn of labor gaps in key industries ranging from healthcare to green energy.
Sectors Most Impacted
- Healthcare: Aging societies mean soaring demand for doctors, nurses, and elder-care workers. Immigrants already make up nearly 30% of U.S. physicians and 25% of nurses.
- Agriculture: Seasonal migrant labor sustains crop production across the U.S. and Europe. Without these workers, food prices rise sharply.
- Construction: Infrastructure renewal in Europe and North America depends on immigrant labor for both skilled and unskilled roles.
- Technology: Many of the world’s leading AI researchers and software engineers are foreign-born. Restrictive immigration policies risk stifling innovation.
The Political Backlash
Despite economic necessity, immigration remains contentious. Nationalist parties in Europe, anti-immigration rhetoric in the U.S., and cultural anxieties in Japan all create friction. Policymakers face the challenge of communicating a difficult truth: without foreign workers, economic prosperity will decline.
Global Competition for Talent
It’s not only about low-wage roles. A growing global contest is underway for skilled professionals. Countries like Canada and Australia have launched aggressive points-based immigration systems to attract engineers, scientists, and healthcare workers.
If the U.S., UK, and EU do not adapt, they risk losing talent to more welcoming economies.
Long-Term Risks of Inaction
- Slower Economic Growth: Shrinking workforces directly reduce GDP growth potential.
- Fiscal Imbalances: Without enough working-age taxpayers, pension and healthcare systems face insolvency.
- Innovation Gaps: Talent shortages in STEM fields could slow technological advancement.
- Global Influence Decline: Economies unwilling to embrace immigration may see reduced geopolitical and economic influence.
Potential Policy Solutions
- Expand Work Visas: Simplify visa processes for both low- and high-skilled workers.
- Pathways to Citizenship: Provide long-term stability for immigrant families to integrate into society.
- Targeted Recruitment: Build programs to attract healthcare professionals, engineers, and teachers.
- Public Engagement: Counter misinformation by highlighting immigrants’ contributions to growth and stability.
Expert Commentary
- Economist’s View: “Immigration is no longer an option for rich economies—it is a demographic necessity.”
- Healthcare Leaders: “Without international recruitment, we simply cannot meet the demand for doctors and nurses.”
- Policy Analysts: “The question is not whether to increase immigration, but how to design systems that balance economics with social cohesion.”
FAQs
Q1: Why are foreign workers so critical for rich economies?
Because aging populations and declining birth rates reduce the domestic labor supply, creating gaps that only immigration can fill.
Q2: Which sectors depend most on foreign workers?
Healthcare, agriculture, construction, and technology are especially reliant on immigrant labor.
Q3: What risks arise if immigration is restricted?
Without foreign workers, rich economies face slower growth, fiscal deficits, and rising labor shortages.
Q4: How do politics complicate immigration policy?
While economic data supports immigration, nationalist movements and cultural anxieties make reforms politically sensitive.
Conclusion
The debate over immigration often centers on cultural identity and political ideology. But from an economic perspective, the conclusion is clear: rich economies cannot grow without foreign workers.
Japan’s quiet reliance, Europe’s looming demographic crunch, the UK’s retirement wave, and America’s policy gridlock all highlight a shared reality. The question is no longer whether to welcome foreign workers, but how quickly and effectively policies can be reshaped to secure the future.
Immigration is not just a social debate—it is the defining economic strategy of the 21st century.
