The Bank of Japan, the European Central Bank, and the Bank of England have publicly agreed that without a large wave of immigration, their economies will not survive in the next two decades.
At the annual meeting of the Federal Reserve in Jackson Hole, Wyoming, three central bank governors (Kazuo Ueda, Christine Lagarde, and Andrew Bailey) repeatedly warned that an aging population and low birth rates are destroying the labor market in Japan, Europe, and the UK.
According to a report by the Financial Times, the issue is no longer an imminent threat but has become a reality. Kazuo Ueda stated that the labor shortage in Japan is no longer just a red flag but is 'one of the most serious economic threats to the country.'
Christine Lagarde stated that Europe is facing a population problem. By 2040, the eurozone could lose 3.4 million working-age people if the current population trend continues.
Andrew Bailey also emphasized the labor issue in the UK, stating that by 2040, 40% of the population will be older than the standard working age.
Bailey also emphasized the labor participation situation. He pointed to a sharp decline in the number of young workers and a significant increase in the number of individuals classified as 'long-term patients.'
Central banks are not downplaying this issue. They also do not emphasize that wage pressures from labor shortages will increase difficulties in controlling inflation, regardless of interest rates.
All three speakers focused on a cold hard fact: the labor shortage is structural. There are not enough young people entering the workforce to cope with retirees, and no policy measures can create people out of thin air.
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