Why refugee talent could be key to Europe’s economic future

Europe is facing a quiet but transformative shift. Populations are ageing, birth rates are falling and workforces are shrinking. Nearly one million workers are leaving the labour market each year, placing mounting pressure on businesses, public finances and social systems.

The recently-published position paper developed by the European Business Summits; UNHCR, the UN Refugee Agency; and Ingka Group | IKEA, Labour Market Integration as a Strategic Imperative for Europe’s Competitiveness, states that this demographic challenge is also about untapped potential. And unlocking this potential requires a cross-sector effort.

Refugees, migrants, women and other groups, representing large segments of the population, remain underrepresented in European labour markets.

Many are ready to work but systemic barriers prevent them from contributing fully to the economic well-being of the communities they live in. When labour shortages are impacting sectors from healthcare to logistics, better integrating these groups is a strategic economic imperative.

Among these groups, refugees and asylum seekers represent one of Europe’s most overlooked sources of talent.

They are often discussed in terms of humanitarian need, but they also bring skills, experience and resilience that can strengthen economies. Many arrive with professional backgrounds, multilingual abilities and strong adaptability – qualities valuable in today’s labour market.

Europe has some of the highest numbers of forcibly displaced and stateless people globally in 2025, with forced displacement driven both by conflicts within the region, such as in Ukraine, and from outside, including Syria. While refugees generally have the right to work, in practice their access to employment is often delayed or restricted by language barriers, information gaps, limited recognition of qualifications, administrative hurdles, and insufficient support systems for refugees and employers.

Many refugees find themselves in temporary, low-paid jobs not matching their experience. Others struggle to find jobs due to limited local language skills, fragmented job-matching systems, or companies lacking guidance on hiring displaced talent. For single parents, people with disabilities or those facing discrimination, the obstacles are even greater.

Addressing this gap requires rethinking labour market integration. The position paper sets out a strategic framework with three priorities that can reshape the landscape:

The right to work alone is not enough. What is needed is a more comprehensive approach that supports people from arrival through to long-term career progression, enabling them to contribute to more diverse and inclusive workplaces.

Language learning is a critical starting point. While many countries offer state-funded language courses, these are often too short, inaccessible or poorly aligned with labour market needs. Effective local language learning – integrated into workplaces – can significantly improve employability and retention.

Recognising existing skills is equally important. Many refugees are unable to practise their professions due to slow or complex qualification recognition processes. Bridging courses and paid internships can help individuals gain relevant professional experience more quickly.

At the same time, upskilling and reskilling must become more inclusive. Modular, flexible training programmes enable individuals to build skills while balancing work and family responsibilities. Linking these programmes to real labour market demands, through closer collaboration with employers, unlocks solid employment opportunities.

Investing in digital inclusion – including access to devices, connectivity, digital public services, online learning platforms and basic digital skills – is also essential to enable refugees to participate fully in modern labour markets.

Across Europe, businesses are already playing a critical role by adopting more flexible hiring practices, investing in training and creating pathways for refugees to progress in the workforce.

However, scaling these efforts will require stronger collaboration across sectors and partnerships that can help address both perceived and real barriers to hiring. Businesses, governments and international organizations can work together to simplify recruitment processes, provide practical guidance to employers and align training systems with economic needs.

Skills-based hiring is a key opportunity. By focusing on competencies and potential rather than solely on formal qualifications or documentation, employers can access a more diverse talent pool.

Incentives also matter. Wage subsidies, training grants and supported apprenticeships can encourage employers, particularly small and medium-sized enterprises, to invest in hiring and upskilling refugees.

Workplace-based support, such as job-specific language training, mentoring and clear progression pathways, strengthens retention and productivity.

Both UNHCR's refugee employee platforms and Ingka Group's Skills for Employment scheme, which provides refugees with 3-6 months of language and skills training, demonstrate how coordinated action and holistic approaches to refugee hiring can drive successful workforce integration and create positive outcomes for both employers and refugees.

The effective labour market integration of refugees does not happen in isolation – it relies on well-coordinated support systems at the local level.

Early access to integration support, including language training, skills assessment, education pathways and basic services, such as housing and healthcare, is essential. Linking these services facilitates employment and reduces long-term dependency.

Local authorities are critical. Strengthening municipal capacity, alongside better coordination between national and local systems, can improve the consistency and effectiveness of integration efforts.

Involving refugees in designing solutions is equally important. Their perspectives help ensure that programmes respond to real needs and challenges.

Data also matters. Measuring outcomes and understanding barriers requires better inclusion of refugees in administrative data systems, with insights into skills, employment pathways and obstacles. This enables more targeted and evidence-based policies.

Finally, fostering connections between refugees and host communities through local initiatives, volunteering and networking builds trust and supports social cohesion, both of which are key to sustainable integration.

Europe’s demographic transformation is already under way. The question is not whether it will reshape labour markets, but how.

Ensuring that refugees and underrepresented groups can fully participate in economic life will be critical to social growth, innovation and competitiveness. Evidence shows that reducing barriers to employment can significantly boost economic outcomes – for individuals, families and entire societies.

Addressing refugee unemployment and underemployment in Germany and other European countries could increase gross domestic product (GDP) by up to 0.7%. Labour market integration of people forced to flee must therefore be seen as both an economic strategy and a social investment.

By unlocking existing talent, investing in skills and building inclusive labour markets, Europe can turn this demographic change from a structural risk into a source of long-term prosperity.