ECB: Ukrainian Refugees Could Slightly Ease Euro Area Labour Market Tightness
20 June 2022
By David Barwick – FRANKFURT (Econostream) – The influx of Ukrainian refugees due to Russia’s war of aggression against its neighbour has the potential to slightly ease euro area labour market tightness, but the ultimate impact cannot currently be forecast with much reliability, the European Central Bank said on Monday.
In a pre-release from the fourth economic bulletin of 2022, due out Thursday, the ECB wrote that ‘[t]he increase in labour supply that results from the influx of Ukrainian refugees could slightly ease the tightness observed in the euro area labour market.’
‘If they can find jobs without a lengthy integration process, Ukrainian refugees could help the market to respond to the currently buoyant demand for labour and address worsening skill shortages’, the ECB continued. ‘However, the high levels of uncertainty surrounding the future course of the war makes it harder to accurately assess and quantify the eventual impact.’
The ECB assumed a medium-term labour force participation rate of between 25% and 55% for refugees of working age.
‘Overall, the influx of Ukrainian refugees is expected to lead to a gradual increase in the size of the euro area labour force’, it said. The medium-term increase would be on the order of roughly 0.2% to 0.8%, corresponding to 0.3 and 1.3 million workers, according to the ECB.