This article examines the drivers and macroeconomic implications of the recent significant expansion of the euro area labour force, which reached a record high of 173 million people in 2025. The increase reflects rising labour force participation across demographic groups and sustained net migration, with older, more educated and foreign workers accounting for much of the growth. These compositional shifts, particularly the larger share of older workers, have exerted downward pressure on the aggregate unemployment rate, while reducing labour market dynamism and contributing to a declining trend in average hours worked. Labour market policies aimed at mitigating the longer-term drag on potential output and productivity from population ageing are essential.
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