Silver-haired hires: how to unlock the potential of older workers in Europe

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Across Europe, raising the retirement age is a necessary but hot topic of discussion. The increase in life expectancy is accompanied by an increase in number of retirees compared to workers, which ultimately results in increasing pressure on state budgets.

In countries where pension reforms have sparked controversy, one argument continues to resurface. Many argue that raising the retirement age cannot be a one-size-fits-all solution. Due to disparities in wealth, health and work tasks, longer working lives affect some employees more than others. Specifically, those who earn less, are in poor health, or have demanding jobs are likely to suffer more from the hikes – in cases where exemptions do not apply.

When trying to close the productivity gap, governments must therefore take into account the profiles of workers. Understanding the disparate reasons for late and early retirement can be key to increasing production, while promoting equality and employee well-being.

Health factors

For those forced to leave the workforce before retirement age, one of the determining factors is health. If you are not physically able to continue working, most countries will allow you to receive your pension early. This means that investing in healthcare is an important tool for governments to keep employees on the job longer.

However, barriers to health are also linked to the nature of the profession. “In general, white-collar workers have higher labor force participation rates than blue-collar workers,” says Arthur Seibold, assistant professor of economics at the University of Mannheim. He notes that this is due to the “physically demanding” nature of the work, although the same can sometimes be seen for mentally demanding professions.

EU countries, including FranceItaly and Spain, provide additional pension provisions for a large number of jobs considered dangerous or arduous. In France, for example, if you work nights or in extreme temperatures, you may qualify for early retirement.

It’s also important to note that while a long working life can have negative health effects in some occupations, some studies show that delaying retirement reduces the risk of cognitive decline.

Financial bonuses and other incentives

In European countries, employees can generally afford to stop working at legal retirement age thanks to public pensions. However, wealthy people have the option of retiring early.

Barret Kupelian, chief economist at PwC, spoke to Euronews of the Golden Age Index, a ranking of OECD countries based on the employment of older workers. “We find that when house prices rise sharply in the UK, older workers tend to leave the labor market,” he explains. “This means that potential retirees feel comfortable that housing is doing the saving for them and that they can retire sooner than they had planned.”

Even when workers can afford to retire, that doesn’t mean financial incentives can’t encourage them to stay in the workforce. Many countries allow workers to continue accumulating pension supplements after the statutory retirement age, and they may choose to offer tax bonuses to older workers. In Belgiumfor example, the system “flexi-job” allows people who have already retired to return to work and receive their salary tax-free.

Other measures can encourage workers to delay retirement, including flexible working conditions and a positive work environment.

“Older workers want flexibility, both in terms of where and when they work, because some of them have caring responsibilities, particularly towards their older parents,” said Barrett Kupelian.

Job satisfaction

Euronews spoke to Edward – who preferred not to give his real name – who recently retired from his job as a chartered accountant at the age of 72.

“I lived in south-west London and was walking down the high street when I came across an old acquaintance who asked me what I was doing,” he explains.

“When I told him I had retired, he told me I was too young for that and that I was exactly the person he needed. He insisted that I come to his office , around the corner where we met. My specialty was a bit unusual, but he knew it and it suited his business.

“I ended up staying more than five years past retirement age and really enjoyed my job. I worked with a young team. They were very welcoming and I felt like I was benefiting of a new life. It’s always interesting to know the different generations.

Janie, who also uses a pseudonym, spoke to Euronews of his decision to change profession and continue working after retirement age.

Previously a fund manager, she now works in the luxury sector.

“I am self-employed and it suited me to continue working. I find what I do very rewarding, both financially and for my own satisfaction. I love the excitement of persuading someone to buy what I sell and it doesn’t diminish with age. Sometimes I think I’m going to give up and retire, but then I wonder what I would do instead.

Remove barriers for older employees

Janie says ageism has never stopped her from doing her job. Still, she added: “I sometimes feel like I’m being ‘dismissed’ because of my age.

Jelle Lössbroek, postdoctoral researcher at the Netherlands Interdisciplinary Demographic Institute, told Euronews that for most older workers, “keeping your job is generally not an obstacle.”

“Older workers generally have good employment protection and it is therefore difficult to fire them in most countries. In fact, their employment protection is often better than that of younger workers.”

Despite this, it can be more difficult for older workers to be rehired, particularly because they tend to cost more than younger employees.

To The NetherlandsMr Lössbroek adds that specific labor legislation can make it more difficult to work beyond retirement age. “In the Netherlands, employers can fire their employees when they reach retirement age,” he explains. If the staff member is retained after this period, the employer needs another reason to dismiss them. This means that many employers are inclined to give temporary contracts rather than permanent contracts to older employees.

Another barrier for workers nearing retirement age is changing technology, as younger employees tend to be more digitally savvy. Governments and businesses can offer courses to reduce this skills gapalthough some older workers might feel less encouraged to learn computer skills.

Regardless of how policymakers seek to address the problem, retirement debates will only gain momentum in the decades to come.

“In many European countries we are already seeing labor shortages in many professions, and companies will therefore have a vested interest in retaining older workers,” said Professor Seibold, of the University of Mannheim. .

The question for states is how to achieve this fairly and effectively, often in the face of political backlash.