Keeping older workers in the labour force

The European population is living longer, with natural decline cushioned only by net migration. The proportion of people over 50 is increasing, and demographic ageing – the working-age population shrinks while the number of older individuals grows – is expected to continue as the baby boom generation retires. To address related labour shortages, European policymakers are promoting longer workforce participation among older people. Most EU Member States have raised statutory retirement ages and limited early pension access. However, extending working life requires more than just legal measures. This report analyses employment developments, job quality differences across age groups and differences among older workers. It explores the factors influencing the transition to retirement across Europe and examines Member States’ policies and practices to keep older workers in the workforce. The report’s main aim is to explore effective approaches to engaging older people in the labour market, identifying ways to enable and motivate them to stay and determining who should be involved to ensure an age-appropriate working environment.
 

Policy context

Europe has seen a steady increase in the number of workers aged 55 or above who are active in the labour market, but this age group’s participation can be boosted further. However, this is a complex endeavour; attitudes, workplace practices and job quality are key factors.
 

The EU has been addressing demographic change and its implications for the labour market for more than two decades – in line with the EU treaties and the Charter of Fundamental Rights of the European Union – through several policy approaches and related instruments.
 

The European Pillar of Social Rights provides a framework to help Member States adapt to new challenges while promoting fairness and solidarity between generations. It emphasises the right to a working environment adapted to workers’ needs, thus enabling them to stay longer in the labour market.
 

In 2023, the European Commission launched a demography toolbox for Member States, outlining policy options on intergenerational justice, non-discrimination and gender equality. The Council of the European Union welcomed the toolbox, highlighting its analysis of demographic challenges across EU Member States and the call for a comprehensive approach to managing demographic change.
 

Key findings

There were almost 40 million older workers by 2023. The employment rate among those aged 55 or older increased by almost 20 percentage points during 2010–2023, owing to factors including raised retirement ages, increased life expectancy and better health.
 

The risk of long-term unemployment is greater for older workers. The long-term unemployment rate among older workers in the EU is 13.5 percentage points higher than among mid-career workers.
 

Retention of older workers in the labour force has increased. The retention rate increased from 44% in 2010 to 57 % in 2022, reflecting pension system reforms and tight labour markets. Gender differences in retention rates are particularly large in certain eastern European countries and Austria.
 

Job quality is better for older employees. This may be partly driven by the healthy worker effect: employees tend to retire earlier from worse-quality jobs. Overall, older women have worse job quality than older men.
 

Job quality profiles help in understanding inequalities among older workers. Profiles highlight that one third of older employees work in ‘empowered jobs’ with good job quality, while one fifth are in ‘high-risk’ jobs, associated with low mental well-being, financial insecurity and a poorer work–life balance.
 

Poor health is a significant risk factor for early labour market exit. Workers suffering from ill health are more likely to leave early through disability pension, unemployment or early retirement.
 

Gender inequalities in the workforce result in unfavourable conditions. They cause mental health challenges, wage gaps and job insecurity. The detrimental effects can compound and intensify throughout women’s careers, with consequences for older women’s employment.
 

Motivation to remain employed differs from motivation at work. Older workers who are highly motivated at work may not be motivated to continue working until or beyond the pension age. This may be influenced by factors such as self-determination, positive attitudes towards early retirement and cultural preferences.
 

Ageism and discrimination persist in workplaces. Despite legislation prohibiting age-based discrimination, many older workers face harassment and unfair treatment in recruitment, promotion and dismissal processes.
 

Care facilities and social support are crucial for older workers. Many workers exit the labour market prematurely to care for family members, particularly in countries with insufficient care facilities and social support systems.
 

Member States are incentivising extended working lives. Many Member States, with varying degrees of success, encourage delayed retirement by providing additional pension benefits for those who work beyond statutory retirement age.
 

Flexible options for retirement have been introduced. Recent changes in some Member States allow older employees to retire gradually. This helps retain workers who might otherwise leave work entirely.
 

Sustainable workplace practices are important. Insights from Member States show that the retention of older employees requires work in multiple areas: digital skills, hybrid and telework, human resources practices, healthy workplaces and occupational safety and health practices.
 

Collective agreements focus on retention schemes and provisions targeting older employees, such as reduced working time, part-time work and phased retirement schemes. However, addressing the effects of demographic change is not yet a primary concern in collective bargaining overall.
 

Policy pointers

Reward work and later retirement through public incentive systems that motivate people to remain engaged at work.
 

Discourage early retirement options while considering the needs of workers who have arduous working conditions and those with long employment records.
 

Rigorously implement policies that have been proved to work and highlight best practices in Member States. Targeted support for older employees can have positive effects in sectors with high early retirement rates.
 

Focus on older workers to prevent long-term unemployment, as data indicate they take longer to find new employment once unemployed. Emphasise redeployment within an organisation.
 

Increase access to and the quality of (health)care services, as a significant number of older workers retire early primarily to provide care. This is often exacerbated by limited access to care facilities, especially in eastern European Member States.
 

Manage ageism in the workplace. Organisations need to retain older workers and encourage retirees to return by addressing age discrimination and implementing age management policies.
 

Consider introducing flexible retirement models, as has already been done in some Member States.
 

Ensure that the concerns and needs of older workers are considered more systematically in collective bargaining and social dialogue, for example through joint action on demographic funds, flexible retirement options and age-appropriate training.