At present, many public policies and workplace practices discourage older people from carrying on working. On average in OECD countries, fewer than 60% of people aged between 50 and 64 have a job, compared with 75% of people in the 25-49 age group (see Chart 1).

The Nordic countries which are among the most competitive in the world according to a recent World Economic Forum report, have a higher proportion of their population in the 50-64 age group working, than in countries such as Ireland, France and Germany

Such policies and practices are relics of a bygone age and unsustainable at a time when population ageing is straining public finances and holding back higher living standards. If there is no change in work patterns, the ratio of older inactive persons per worker will almost double in the OECD area over the next decades, from around 38% in 2000 to just over 70% in 2050.

This, in turn, would lead to higher taxes and/or lower benefits, coupled with slower economic growth. On the basis of unchanged patterns, OECD analysis shows, GDP growth per capita in the OECD area could shrink to around 1.7 % per year over the next three decades, about 30% below the average annual rates witnessed between 1970 and 2000.

To avoid such an outcome, the OECD argues, age-friendly employment policies are needed to encourage older people to remain longer in the workforce. At present, average effective retirement ages are well below official retirement ages in many countries, especially European countries (see Chart 2). While countries have begun to take action – notably in the area of pension reform – more needs to be done.

The OECD recommends action in three key areas:

Governments should ensure that pensions and other welfare arrangements encourage rather than discourage work at older ages. They should also devote adequate resources to help older jobseekers find a new job. 

Employers must end discrimination and adapt work practices to an age-diverse workforce. The practice of mandatory retirement in firms should be questioned, as it is inconsistent with the general objective of providing greater choice to older workers on when to retire.   
 
Older workers themselves will need to change their attitudes towards working longer and acquiring new skills – there is a training gap between older and younger workers in all countries, but in some countries it is particularly large (see Chart 3).

On 17 October, government officials, social partners, academics and representatives of civil society will meet at Palais d’Egmont in Brussels to discuss the main lessons that have emerged from an OECD review of policies in 21 OECD countries to promote employment of older workers.

On 18 October, ministers and senior officials will meet in closed session to discuss a range of issues, including: how best to make later retirement more attractive; how to change entrenched attitudes; and how to promote the employability of older workers.

Related: 10/10/2005

Trichet: Euro-zone annual GDP growth will fall below 2% by 2010 without reforms to increase labour participation rate