Older Workers in Germany: Employment Potentials in International Comparison

Abstract

"In Germany, as in many other countries in the western world, the baby boomers are reaching retirement age. As fewer young workers are entering the labour market than older workers are leaving due to low birth rates, the labor force workers is falling, all other things being equal. At the same time, the funding problems in the pension insurance system are growing, as fewer and fewer people are paying into the pension scheme, particularly in the internationally widespread pay-as-you-go systems. At the same time the proportion of pensioners is growing. Against this backdrop, the labor market participation of older people is increasingly coming into focus. The report begins with an overview of older people's labour force participation in a broader international comparison. This is followed by a description of the situation in Germany. A closer look will then be taken at the countries that are at the forefront of older people's labour force participation. The aim is to obtain indications of the factors that may have contributed to the high level of employment among older people in these countries. The Federal Republic of Germany has clearly caught up in the employment of older people in recent decades. This applies in particular to the 50-64 age group. Compared to the leading countries, Germany is only a few percentage points behind. However, the 65-74 age group is still lagging further behind. The future gap to other countries in this age group will be influenced by opposing developments. The further steps towards "retirement at 67" are likely to reduce it further, but the "retirement at 63" will slow it down. However, Germany is still outperformed by some countries in terms of the employment rates of older people. This raises the question of what factors could be behind the favourable development of the labour market for older people in these countries. For the purposes of comparison, this report takes a closer look at the situation in Japan, New Zealand, Iceland, Norway and Sweden, all of which have even higher employment rates for older people than Germany. Various aspects that are important for the employment of older people are analyzed in turn from an international comparative perspective. The country comparison reveals a number of important points that could be considered in Germany. The high level of employment among older people in Iceland, Sweden and Norway is linked to the high female labor force participation rate in both countries and continuous improvements in the educational level of the population, including further vocational training. New Zealand has a low pay gap between older and younger workers and comparatively high hiring rates for older workers, following a consistent and publicly visible anti-discrimination policy. In Japan, demographic pressure on labour demand and income requirements at the individual level is of significant importance. High or rising employment rates for older people are not an automatic mechanism. They require good education and qualifications at the individual level as well as the opportunity and ability to engage in lifelong learning. Preventive healthcare is also required for a long working life, which, like education, is best started as early as possible. High employment rates among older people are not only favoured by individual employability, but also by the attractiveness of the labor market and thus the availability of employment for older workers. The more it is possible to address the skills and abilities of older workers, organise age-appropriate work and respond flexibly to employees' wishes, the greater the chance of retaining older workers in the labor market or of winning them back. Finally, regulations and support programmes that provide incentives for employment in old age should also be considered. These include the flexibility of pension entitlement, more favorable labour law provisions for continued employment in old age, the longer period of unemployment benefit for older people, their inclusion in active labor market policy and a review of the regulations in the citizen's allowance that favour early retirement, such as the waiting periods for assets and housing." (Author's abstract, IAB-Doku) ((en))

Cite article

Walwei, U. (2024): Older Workers in Germany: Employment Potentials in International Comparison. (IAB-Forschungsbericht 14/2024 (en)), Nürnberg, 24 p. DOI:10.48720/IAB.FB.2414EN