Europe’s economy needs more older workers

Europe faces significant labour market gaps as a result of demographic change. In the UK alone there are 13.5 million job vacancies, which need to be filled over the next ten years. But only seven million young people are projected to leave school and college over that time.


Despite a growth in the number of older workers since the 1990s, the EU is still failing to meet its target set in 2001 to achieve 50% employment rate of older workers by 2010. Over the period 2002-2008, the average age of labour market withdrawal among the EU-28 had only increased by an estimated 1.3 years, from 60.1 to 61.4.


And whilst the employment levels of older workers has increased over the past decade by 10% there is significant variation across Europe. Just 13% of Hungarians aged 60-64 were in work in 2010 compared to over 60% of Swedes.


Our recent report, Working Longer, An EU perspective highlights interesting initiatives seeking to promote extended working lives from across Europe. For example.

  • Changes since 2006 in Sweden offer more favourable treatment for work related income than pension income.
  • Reforms in Croatia have meant that those who retire early are now subject to between a 0.15% and 0.34% loss every month in the value of their pension. In contrast, people who delay retirement are entitled to a 0.15% monthly increase in the value of their pension.
  • France has introduced a gradual retirement scheme, which allows workers to reduce their working hours on reaching 60 (62 in 2017) and receive a proportion of their pension in return.
  • A Portuguese New Opportunities Initiative gives preferential access for older people to lifelong learning.
  • The Finnish government has invested in the KESTO-program built up a database for research on extending working life.


Not all of these initiatives will work in every country and our analysis suggests a need for greater understanding of “what works”. Government initiatives to support older workers are often poorly evaluated for effectiveness. As a result it is difficult to “learn from the best”.


Older people have not been exempt from the impact of the recession. Governments have removed incentives to early retirement within pension schemes which has resulted in greater numbers being active in the labour market, but unemployed. Across Europe, a relatively high proportion of unemployed 55-64 year olds have not worked for 12 months or more.


In every EU Member State, the life expectancy of women is higher than that of men, by 5.9 years on average. Yet despite living longer across the EU, women participate less in the labour market and retire earlier.


Our report highlighted the need to do more to up-skill the older workforce across Europe. The current cohort of older workers in Europe have low levels of education and qualifications compared to younger groups.


It’s not just having a skilled workforce which is an issue. European policymakers must focus energies on creating the sort of jobs which European citizens want to do. There has been inadequate focus on the extent to which Europe’s economy has been creating the right sort of jobs to meet the needs and wishes of the supply of older workers.


One of the biggest challenges facing the working longer agenda is poor health of older workers. However, our analysis found relatively few initiatives by governments or employers to explicitly improve the health of older workers.


The EU has led the way in delivering legislation to tackle age discrimination in the workforce. But we must ensure the legislation is properly implemented. We must also monitor whether the legislation has tackled negative attitudes towards older workers.


On the one hand, the message is positive, participation in the labour force by older workers is up. But it is only moving up slowly. Those EU economies which take steps now to maximise the potential of older workers, are likely to see significant economic return on their investment.


David Sinclair, ILC


Working Longer: An EU perspective, supported by Prudential, explores how the EU and its 28 members have responded to the working longer agenda. The report is available on the ILC-UK website here.


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