Promoting the labour force participation and employment of older people in the EUs
Conclusions
People between the ages of 55 and 64 participate in the labour market more than in the past.
The labour force participation and employment rates of older people have improved considerably over the past 15 years without negatively affecting those of young people. Increasing life expectancy, improving health, higher educational attainment and increased female labour force participation, along with supportive retirement, unemployment, disability and employment policies, have all contributed to this trend. The increase in the employment rate of older workers can be mainly attributed to higher job retention rates rather than the persistently low job-hiring rates. Higher severance costs and, in some Member States and sectors, employment protection legislation may contribute to employers’ reluctance to dismiss older employees and disincentivise their hiring. The employment and activity rates of older individuals vary across Member States, suggesting an important role for policies and institutions in driving them.
If they lose employment, older people are likely to have more difficulties than prime-age workers with finding a new job.
Although the unemployment rate of older people is below that of prime-age individuals, they are more likely to become long-term unemployed or inactive and struggle with re-employment. Gaps between the unit labour costs of older workers and their productivity, as well as age discrimination in hiring, contribute to this challenge. Upon losing their job, older individuals are more likely to leave the labour force or enter disability or social welfare schemes.
Older people are still under-represented in the labour market, especially those with lower education and with disabilities, as well as older women and foreign-born older people.
Gender gaps in activity and employment remain pronounced and have led to the formation of a significant gender pension gap. Older adults are also more likely to suffer from health problems that may hinder their participation in the labour market, but they rarely benefit from reasonable accommodations at work. Other barriers to the labour force participation of older individuals include family care obligations and also workplace-related factors and institutional barriers, such as the lack of flexible or part-time work opportunities or changing skills requirements. In addition, older people who were born outside the EU are somewhat more likely, on average, to be inactive than people aged 55 to 64.
Older people complete fewer hours of education and training than younger people but work in jobs that are better matched to their skills and cognitive abilities.
Although training participation rates have increased across the EU, older individuals in some Member States complete fewer training hours. Nevertheless, older workers are better matched to their jobs than their younger counterparts. They are more likely to work in less dynamic workplaces, and this allows them to rely more on pre-existing knowledge and could partly explain why they report less need for skills development. The digital skills levels of older adults are lower than those of younger adults and depend strongly on their educational levels. Promoting digital skills training among older people might be particularly desirable, as such skills have become necessary not only for job tasks but also for accessing education and training.
Projections show that by 2030 there will be an additional 8.8 million economically active older people between the ages of 55 and 68 in the EU.
Pension reforms are expected to be the main driver of the anticipated growth in active older people, but generational shifts will also contribute, primarily due to the ageing of more active and better-educated younger cohorts of women. Despite these positive trends, projections also show that women who have been outside the labour market for a major part of their lives, often due to informal caring responsibilities, and older individuals affected by an illness or disability will still represent a large share of the population of inactive non-retired older people by 2030. Therefore, more targeted activation policies will be essential to activate these subgroups, while taking into account health conditions that can limit the scope for further labour market activity. Furthermore, policies that improve the labour market integration of women in general and support them in reconciling their career and motherhood would contribute significantly to higher employment rates, including among older women.
Incentives to work implemented by changes to retirement systems, tailored working conditions and effective collective bargaining can increase the labour force participation and employment of older individuals.
Reforms such as fair incentives for longer working lives and a greater flexibility for combining work and retirement could contribute to an increase in the activity and employment rates of older people. These reforms should take into account gender, disability, and health, as well as the degree of job strain in certain occupations. Furthermore, flexible work arrangements and reasonable accommodations at work can improve working conditions for older workers. This could, in turn, encourage them to remain in the labour force and promote the employment of people with disabilities who are willing to work. Collective bargaining can also benefit older people, including by improving their working conditions and introducing age-based protection against dismissal.
Tailored training participation and other employment policies can also effectively promote improvements in the labour market outcomes of older people.
Given their needs, older individuals could benefit from short, modular, accessible, inclusive and flexible courses. Participation in training can be effectively promoted using direct financial grants or vouchers, or tools such as individual learning accounts. Hiring based on skills and past experiences can enhance the labour force participation of older people as well. Moreover, the enforcement of anti-discrimination policies and the Employment Equality Directive can increase the hiring of older workers, forcing companies to overcome age-related prejudices. Finally, long-term policies that improve the employability and labour market attachment of younger cohorts can also contribute to preventing future inactivity at older age.