As Europe’s population ages, policymakers face challenges related to employment, living standards and welfare sustainability. How can we keep older workers in employment for as long as possible, and what impediments do those older workers face?
Franz Eiffe, research manager at Eurofound’s Working Life unit, says that in 2023 there were almost 200 million EU employees aged 15 or over.
“Against the background of a swift recovery from the global financial crisis, the European labour market gained 17.3 million employees between 2010 and 2023,” he says. “However, employment has become increasingly skewed towards older employees: while the number of employees aged 54 or younger remained relatively stable since 2010, the number of employees aged 55 or older increased from 23.8 million in 2010 to almost 40 million in 2023.”
Population ageing is not a novel phenomenon, Eiffe says: “It is one of the megatrends that affects European economies and beyond, generating significant imbalances in labour market flows and contributing to labour shortages. The proportion of older people in the total population is projected to increase in the upcoming decades, leading to an inverted population pyramid.
“Population estimates provided by Eurostat show that, by 2100, those aged 65 years and over will account for more than a third of the total population, an increase of more than 10 percentage points compared with 2023.”
From a macroeconomic perspective, Eiffe says the benefits of working longer include a response to labour shortages; relief on public finance and pension systems, benefiting health and welfare systems overall; and a positive impact on work culture and age inclusiveness in wider society.
From an individual perspective, benefits include social inclusion and a feeling of being useful and contributing to society, he says. It’s also positive for household and individual income, and there are higher pension perspectives.
In the earlier phases of pension reform (early 2000s), the focus was on discouraging early retirement by increasing financial penalties for early exit and limiting access to early retirement options, including the restriction of “bridging benefits”, says Eiffe.
“In recent years, the emphasis has shifted towards offering financial rewards for delayed retirement and enhancing the flexibility of combining pension drawdown with employment,” he says. “These changes have been largely welcomed by social partners. However, trade unions have expressed concerns about the impact of these developments on workers in arduous professions and those who entered employment at a young age.”
Additionally, concerns have been raised about the financial impact on vulnerable, often lower-skilled older workers with limited resources who struggle to find re-employment post-redundancy and may become reliant on social insurance or assistance benefits.
The main policies adopted across EU member states include incentivising extended working lives, flexible options toward retirement, cumulating income from work with pensions, labour market training and qualification support, wage subsidies and subsidised employment, return-to-work schemes, and sustainable workplace practices.
As the digital transformation continues, ensuring that older workers aren’t left behind is vital. While technology can be a barrier, it also opens up new ways of working, especially through remote or hybrid work, which can help older employees with health issues or caregiving responsibilities stay active in the labour force.
Europe’s population pyramid is tilting fast. The question is no longer if policymakers and employers must adapt, but how equitably and quickly they can do so. Creating an inclusive labour market that supports older workers isn’t just good policy, it’s essential for economic resilience and intergenerational fairness.
Some strategies that could and should be implemented include pension policies that reward work and later retirement and discourage early retirement; implementing best practices and focusing on older jobseekers; stopping age discrimination; scrutinising recruitment policies; and improving overall job quality for older workers.
