OECD Employment Outlook 2025

Can We Get Through the Demographic Crunch?

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OECD Employment Outlook

9 July 2025

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3. Navigating the golden years: Making the labour market work for older workers

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Andrew Aitken

Abstract

Over the past two decades, population ageing, increasing statutory retirement ages and rising education levels have led to higher employment rates among workers aged 55 and above in OECD countries. However, progress across countries remain uneven, and employment rates decline rapidly from age 60, such that many workers are leaving employment well before reaching the eligibility age for a pension. To sustain living standards and address structural labour shortages, many countries will need people to work beyond 60 or 65. This requires labour market policies and employer practices that support the hiring, retention and most importantly the employability of mid-to-late career workers. Employers, employees, governments and social partners all have a role in promoting lifelong learning, improving job quality and promoting healthy workplaces to ensure the employability, well-being and economic contribution of older workers in an evolving world of work.

In Brief

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Key findings

As life expectancy continues to rise, and more people remain in good health in their later years, the potential to extend working lives also grows. In recent decades, structural factors such as increased longevity, the rising labour force participation of women, and rising education levels have contributed to higher employment rates across OECD countries. At the same time, rising eligibility ages for pensions and tightening early retirement conditions have also promoted higher employment rates of older workers. But employment policies have not always kept pace with the changing labour market to support longer working lives.

As stressed in Chapter 2 of the Outlook, population ageing presents a major challenge for OECD countries, making it imperative to promote the employment and employability of older workers and adapt to fast-changing labour markets. Advances in digital technology and AI are reshaping skill demands, with uneven effects: workers in cognitive, non-routine jobs may more easily adapt to AI integration, while those in manual roles face higher risks of automation. At the same time, the green transition is transforming industries and creating new jobs that require specialised skills.

The key findings of the chapter are as follows:

The good news is that the transition to longer working lives is well underway – employment rates for older workers have risen significantly across OECD countries over the past two decades (2000‑24), especially for women. Among women, employment rates have risen by 10.4 percentage points for those aged 50‑54 and 18.5 percentage points for those aged 55‑59. While employment rates for men have also risen, the gains have been smaller, reflecting their historically higher employment levels.
Despite this progress there remains substantial potential to improve employment outcomes for older workers across OECD countries. Employment rates vary significantly, especially for those aged 60 and above. In 2024, the average employment rate for people aged 60‑64 across OECD countries was 55.9%, with a wide range – from 77.2% in Iceland to just 25.4% in Luxembourg.
Marked disparities also exist by gender, education level and health status, highlighting opportunities to extend working lives. Less-educated older workers have particularly low employment rates: among those aged 55‑64, the OECD average is 49.2% for individuals with below secondary education, compared to 75.3% for those with tertiary qualifications. Similarly, employment rates among people with long-term illnesses vary sharply – from just 22% in Luxembourg to 75% in Sweden (ages 55‑64).
Employment rates still begin to decline from age 50 across OECD countries, and more sharply from age 60. A lifecycle perspective is essential, as steady employment during one’s 50s is correlated with increased likelihood of working into one’s 60s. On average across 25 European OECD countries and the United States, 69% of those steadily employed in their 50s remain employed at some point in their 60s. However, only 59% of adults maintain continuous employment in their 50s, and of these same workers only 31% are consistently employed in their 60s, while 30% do not work at all and 11% have intermittent employment. This highlights the need for early interventions to help workers stay employed and improve long-term workforce participation.
Reducing incentives to retire early through increasing the statutory retirement age and tightening access to early retirement schemes have been at the heart of the policy agenda in many OECD countries, and continued efforts are needed to raise the average age of labour market exit. Carefully designed flexible retirement options can facilitate transitions to retirement and longer working lives. Additionally, ensuring financial literacy and transparency in retirement planning is essential to help individuals make informed decisions about their retirement decisions.
Enhancing incentives for older workers to remain in the workforce is important, but not enough on its own – they also need greater access to meaningful employment opportunities. Therefore, a crucial element of more inclusive ageing and employment strategies is motivating employers to both hire and retain them. Achieving this relies on how effectively companies manage age diversity and harness the strengths of all age groups. Evidence shows that there are positive productivity effects for firms from having a more balanced age structure. Yet employers may hesitate to hire or retain older workers due to concerns about adaptability, workplace accommodations, and productivity. Age discrimination remains a significant barrier. Overcoming these challenges calls for policies that promote both hiring and job mobility for older workers.
Promoting employability throughout working life is essential to improving job opportunities for older workers. While some older workers navigate the labour market successfully, others face skill gaps and workplace barriers that undermine their competitiveness. Across OECD countries, there is often a large gap in access to formal and informal training by age. Effective workforce management, access to life‑long learning, employee‑oriented flexible work options, and healthy working conditions are key to fostering supportive workplaces. Proactive measures – such as occupational health programmes, job redesign, and phased return-to-work initiatives – can help prevent early labour market exit. Policies that support women’s employment, including shared parental leave and childcare subsidies, also reduce the motherhood penalty and advance gender equity.

Introduction

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With life expectancy rising and people living longer than ever, many people will want or need to work longer as retirement ages increase. In recent decades, demographic shifts and higher pension ages have contributed to rising employment rates among late career or older workers across OECD countries. However, government employment policies and employer policies have not necessarily kept pace to support longer working lives. Despite the improvement in employment rates seen across most OECD countries in recent decades, it remains the case that employment rates start declining between the age of 50 and 60, and more rapidly after the age of 60.

This presents a significant challenge for OECD countries. As populations continue to age, ensuring that older workers have the opportunities and support they need to stay employed and thrive in ever evolving labour markets will be critical policy priority – see also Chapter 2. AI is shifting the demand for skills in the labour market by increasing the need for management, business, and digital skills while reducing demand for some cognitive and clerical tasks (Green, 2024[1]). The impact of AI on older workers varies significantly based on their occupation and level of education; highly educated older workers in professions requiring cognitive, non-routine skills are more exposed to AI compared to occupations based on manual skills.1 However, more routine occupations have a higher risk of automation from all technologies (Lane, 2024[2]). Simultaneously, the green transition is transforming industries, creating new roles that require specialised knowledge, and older workers are more likely to be employed in occupations concentrated in high emission sectors (OECD, 2024[3]).

This chapter highlights key trends in employment, unemployment, inactivity and the type of jobs older workers hold – thanks to increases in life expectancy, improvements in education and policy reforms across the OECD, older workers are more active in the labour market than ever before. The chapter builds on the framework outlined in the OECD Recommendation on Ageing and Employment Policies (OECD, 2022[4]) and Working Better with Age (OECD, 2019[5]) and argues that greater efforts are needed to promote the labour market inclusion of older workers, especially in countries where employment rates lag behind among particular groups of older workers. This requires reducing incentives to retire early and rewarding employment at an older age. But it is not sufficient just to improve the incentives for older people to continue working longer; expanding opportunities through raising the demand for older workers is also critical. This requires removing barriers to employment for older workers, encouraging employers to hire and retain them, countering age discrimination, and fostering age‑inclusive workplaces. Promoting the employability of workers throughout their working lives is also a key requirement for longer, rewarding careers. This requires opportunities for lifelong learning, opportunities for career development and mobility, and healthy workers in good quality jobs. While this chapter focuses on workers aged 55 and above, it is crucial to recognise that many interventions – particularly in health, promoting female participation in the labour market, and training – need to occur early and throughout the life cycle.

The remainder of this chapter is structured as follows: Section 3.1 starts by providing an overview of employment trends among late career workers. Section 3.2 discusses how pension reforms can improve incentives for people to stay in employment for longer and how a variety of flexible retirement options can contribute to longer working lives. Section 3.3 argues that it is insufficient just to improve incentives for older workers to continue working, they must also have better opportunities to do so. Boosting employer demand for older workers through overcoming barriers such as age discrimination, perceptions of higher costs, and concerns over adaptability is crucial. Section 3.4 underlines that some barriers affect older workers directly, which make it difficult for them to either stay in their existing job or find a new one. Enhancing employability throughout working life is key to improving job opportunities for mid-to-late career workers. This requires lifelong learning, flexible work arrangements, and proactive measures like occupational health programmes and job redesign to prevent early labour market exit.

3.1. Evolving employment trends among mid-to-late career workers

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3.1.1. Employment rates have increased but significant disparities across OECD countries remain

Employment rates at older ages have risen significantly across OECD countries in recent decades, reflecting the fact that people are not only living longer but also staying healthier for longer. This is a positive development, as increased longevity is now more often accompanied by the ability to remain active and engaged in the workforce. This shift suggests that ageing populations can be a source of strength rather than strain, as societies adapt to longer, healthier lives. On average across OECD countries between 2000 and 2024 the employment rate rose by 9.3 percentage points for those aged 45‑64. Several key trends emerge:

The increase in employment rates has been particularly pronounced for women, reflecting both demographic shifts, social choices and policy reforms aimed at fostering the workforce participation of women. Between 2000 and 2024, the employment rate rose by an average of 10.4 percentage points for women aged 50‑54 and 18.5 percentage points for those aged 55‑59 (Figure 3.1, Panel A). Men have also experienced increases in employment rates, albeit to a lesser extent, partly reflecting that rates for men were already above those for women. For men aged 55‑59 the employment rate rose by 9.5 percentage points between 2000 and 2024.
Employment rates start to decline between the age of 50 and 55, and more rapidly after age 60 (Figure 3.1, Panel A), a trend that is clear across all OECD countries, despite the increase in employment rates at older ages in recent decades. When comparing employment rates at different ages across the life course between birth cohorts there is also a clear decline from the mid‑50s onwards (although there is evidence of a slow decline for men from their late 30s) (Annex Figure 3.A.1).
Employment rates for older workers show some weak signs of convergence across countries. Some countries starting with lower rates, like Hungary and the Slovak Republic, saw the biggest increases among those aged 55‑59 (Figure 3.1, Panel B). At age 60 and above, some countries have relatively low employment rates and have also seen a decline since 2000. In Türkiye the employment rate for those aged 60‑64 has declined by 0.6 percentage points, and in Mexico it has risen by only 1.7 percentage points (data for all countries can be seen in Annex Figure 3.A.2).2
Despite progress, there are still large differences in the level of employment across OECD countries, particularly after age 60 (Figure 3.1, Panel C).3 On average, 48% of women and 64.4% of men aged 60‑64 are employed, but rates range widely – from below 21% in Türkiye and Luxembourg to over 84% in Iceland and Japan. At ages 65‑69 the average employment rate drops to 23.7% for women and 36% for men. Only 6% of women in Slovenia and Belgium work at this age, compared to over 43% in Japan and Korea. These differences show there is room to boost older workers’ employment across the OECD.

Over the past decades, several key factors have contributed to the increased employment and labour force participation of workers aged 55 and above. Beyond policy reforms, structural changes such as improvements in health and education and shifts toward more flexible work arrangements have contributed to this trend. Advancements in healthcare and better living standards have led to improved health and increased life expectancy, enabling older individuals to remain active in the workforce for longer. A study focusing on Sweden highlighted that declining mortality rates among older age groups have allowed more individuals to continue working beyond traditional retirement ages (Laun and Palme, 2019[6]).

The general rise in educational levels among older cohorts has also enhanced their employability. Better-educated individuals are more likely to possess skills that are in demand, facilitating prolonged workforce participation (Allen, 2022[7]). The rise in educational attainment of older workers has narrowed their education gap with younger workers.4 This trend has been particularly pronounced for women. Between 2000 and 2023 in the OECD, the share of women aged 55‑64 with upper secondary or post-secondary non-tertiary education increased from 32.1% to 43.7%, while the share of college graduates rose from around 15.3% to 30.5% (OECD, 2024[8]).

In many OECD countries, the shift from manufacturing to service‑oriented economies has supported higher employment among older workers in recent decades (Autor and Dorn, 2013[9]). Service sector jobs are typically less physically demanding and rely more on cognitive skills, experience, and interpersonal abilities – skills that older workers often have. These roles also tend to offer more flexible working options, such as part-time or remote work options, which can be especially attractive to older adults. However, the transition is not without challenges. Some older workers may need to learn new skills, particularly in digital technology, and not all service sector jobs are high quality – many can be low-paid or insecure.

Figure 3.1. Older workers, especially women are more often in the labour market than ever before
Copy link to Figure 3.1. Older workers, especially women are more often in the labour market than ever before

3.1.2. Employment rates lag behind for women, low skilled workers and those in poor health

Despite the notable improvements in employment rates in recent decades significant disparities persist among various sub-groups of older workers, for example by gender, education and health status. The following key trends emerge:

Gender gaps in employment have narrowed across OECD countries since 2000. In 2000 the average gap in employment rates between women and men aged 55‑64 was 23.2 percentage points and in 2024 this had fallen to 13.1 percentage points. However, narrowing the gender gap remains a key challenge across the OECD with gaps of over 32 percentage points in Costa Rica, Mexico, Colombia and Türkiye (Figure 3.2, Panel A).
Skills are a key factor driving employment and employability of older workers, with highly skilled individuals staying employed longer.5 In 2023, the average employment rate for people aged 55‑64 across the OECD was 50.4%, but was 76.7% for those with tertiary education – a gap of over 26 percentage points (Figure 3.2, Panel B). In countries such as the Slovak Republic, Luxembourg and Belgium, employment rates for less-educated older workers were between 32% to 37%, while in Iceland, New Zealand and the Netherlands, they reached 65‑69%. Encouragingly, employment has increased for older workers at all education levels (Annex Figure 3.A.3), however those with higher education are still far more likely to remain in work beyond age 65 (Annex Figure 3.A.4).
Employment rates are consistently lower for individuals with long-term illnesses across all ages. Among those aged 55‑64 with long-term illness, rates vary widely among the 23 countries with available data, from 22% in Luxembourg and 30% in the Slovak Republic to 75% in Sweden (Figure 3.2, Panel C). On average, the employment rate for this age group is 52%, compared to 69% for those who do not report having a long-term illness. As populations age and chronic health conditions become more prevalent, addressing these disparities will be increasingly important.

These results highlight the need for greater efforts to enhance the integration of older women. Persistent gender norms and caregiving responsibilities often hinders women’s labour force participation, especially for mothers. Women are more likely to have interrupted career trajectories due to caregiving earlier in life due to childbirth and also later in life due to adult caregiving (Maestas, Messel and Truskinovsky, 2024[10]; Van Houtven, Coe and Skira, 2013[11]). This often leads to fewer opportunities for promotions and lower lifetime earnings, which persist into older age. The gender pay gap generally widens with age, reducing the financial incentive for women to stay in employment. Additionally, many women work part-time, limiting their access to leadership roles and higher-paying positions. Older women also often face discrimination based on both age and gender (Lahey and Oxley, 2021[12]). While individual factors such as health, caregiving responsibilities, and personal preferences contribute to early retirement among women, joint decision-making within couples significantly can amplify this trend. Women are more likely to adjust their retirement timing to match that of their spouse (see for example García-Miralles and Leganza (2024[13]) and Lalive and Parrotta (2017[14])).

Figure 3.2. Employment rates for women and the lower skilled generally lag behind the average in most OECD countries
Copy link to Figure 3.2. Employment rates for women and the lower skilled generally lag behind the average in most OECD countries

Employment rates by gender, level of education and long-term health status, persons aged 55‑64

One reason low-skilled workers have lower employment rates than more educated workers is the rise of automation and the growing demand for cognitive, technical, and digital skills. Many low-skilled jobs – such as clerical work, manufacturing, and basic customer service – are easily automated, leading to fewer job opportunities (Lassébie and Quintini, 2022[15]). These workers are also more likely to be in physically demanding jobs and tend to have poorer health and fewer years in good health. Low-skilled workers also face more barriers to reskilling and switching sectors, which further limits their job prospects (see Chapter 2).In contrast, higher-skilled workers are better able to adapt, as their jobs rely on problem-solving, creativity, and specialised knowledge – skills that are harder to automate (Lane, 2024[2]).

Individuals in poor health encounter additional barriers such as physical limitations and workplace discrimination which have a detrimental effect on employment rates. Poor health also leads to absenteeism and lower productivity (Grinza and Rycx, 2020[16]). Moreover, inadequate workplace accommodations or flexible arrangements further limit the participation of workers with disabilities or long-term illnesses. Chronic illnesses or disabilities often result in early labour market exits, contributing to persistently low employment rates among this group (OECD, 2022[17]). A key challenge is that intervention often comes too late – many workers with disabilities have already experienced unstable employment histories or prolonged detachment from the labour market before receiving any formal support (OECD, 2022[17]).

3.1.3. Once unemployed it is harder for older workers to get back into work and inactivity rises with age

The level of unemployment among 50‑64 year‑olds is lower than the rest of the population (apart from those aged 65‑69) (Figure 3.3, Panel A). Unemployment rates declined between 2000 and 2024 for most older workers. Among women, the unemployment rate fell by between 0.9 to 0 percentage points at ages 50‑64. Similarly, between the age of 50‑64 men also saw declines in unemployment of 1‑2 percentage points. However, among individuals aged 65‑69, unemployment increased by 0.9 percentage points for men and 0.5 percentage points for women. However, although unemployment is a less frequent event among older workers, when it occurs, unemployment tends to be long-lasting (Annex Figure 3.A.5).

Older workers often struggle to re‑enter the labour market after experiencing unemployment, and inactivity tends to rise with age. A significant barrier is employer bias, as older workers are often perceived as less adaptable and lacking technological proficiency, which hurts their chances of being hired (Neumark, Burn and Button, 2019[18]). Long-term unemployment also leads to skill loss, making it harder to compete in a rapidly evolving labour market. On top of this, employers may see long unemployment spells as a sign of low motivation or productivity (D’hert, Baert and Lippens, 2024[19]). Being unemployment can also harm mental health and increase stress, creating a cycle that makes job searching even harder (Gedikli et al., 2023[20]). Addressing these barriers – through reskilling programmes and countering age discrimination for example – is essential for helping older workers find new jobs.

Figure 3.3. Levels of unemployment and inactivity have fallen on average across OECD countries except for a rise in unemployment among those aged 65‑69
Copy link to Figure 3.3. Levels of unemployment and inactivity have fallen on average across OECD countries except for a rise in unemployment among those aged 65‑69

Change in unemployment and activity rates by age and gender 2000‑24, and overall rates by age, OECD

Distinguishing between job displacement and general unemployment among older workers is crucial, as displacement is typically involuntary and driven by structural economic shifts, leaving workers unprepared. In contrast, general unemployment includes broader causes such as voluntary exits. This distinction is important for policy design, enabling targeted support for displaced older workers who often face longer joblessness and steeper wage losses.

When older workers do experience job displacement, they face much greater challenges compared to younger workers: they spend more time unemployed, are significantly less likely to become reemployed, and when they do find new work, they typically suffer much larger wage losses – see for example OECD (2018[21]); Jacobson, Lalonde and Sullivan, (1993[22]); Davis, Von Wachter and Hall (2011[23]). Additionally, many older workers are more likely to exit the workforce entirely, either because they see limited opportunities for advancement or opt for early retirement (Farber, 2017[24]).

Concomitant with the rise in employment rates, inactivity rates have dropped substantially, particularly among women. For women aged 50‑54, inactivity fell by 10.2 percentage points between 2000 and 2024, and even more for those aged 55‑59 and 60‑64, with drops of 18.4 and 23.3 percentage points, respectively (Figure 3.3, Panel B). Inactivity also fell by 13.1 percentage points on average for women aged 65‑69. Men also saw similar improvements. However, there are large differences between countries, in Iceland, Japan and New Zealand, less than 30% of people aged 60‑64 are inactive, compared to over 60% in Austria, Türkiye and Luxembourg (Annex Figure 3.A.6).

Levels of inactivity also vary dramatically by qualification level and by gender across OECD countries. In 2023 the average rate of inactivity for women aged 55‑64 with qualifications below secondary level was 54.6%, compared to 36.7% for men in this age and qualification group (Annex Figure 3.A.7). For women aged 55‑64 rates of inactivity range from 36‑41% in New Zealand, Sweden and Korea to over 70% in Türkiye, Poland and Costa Rica. In contrast rates are much lower for people with tertiary qualifications, but rates are on average almost double for women (26%) compared to men (16.5%).

3.1.4. A lifecycle perspective is critical to supporting employment at older ages as being employed in your 50s is strongly correlated with employment in your 60s

The employment patterns of people in their 50s are likely to have an important influence on their employment patterns in their 60s. On average across 25 European OECD countries and the United States for which there is available data, 59% of adults worked throughout their 50s while the rest were not consistently employed. On average about 30% of adults never worked during their 50s while the remaining 11% experienced intermittent employment.6 On average across these OECD countries the likelihood that someone is employed at some point in their 60s is 69%, conditional on being steadily employed in their 50s (Figure 3.4). In contrast only 8% of those who were never employed in their 50s were employed at some point in their 60s. Of those who were employed 80‑99% of the time in their 50s (high intermittent), 43% worked longer in their 60s, and 34% of those with low intermittent employment worked longer.

This persistence is influenced by factors such as job stability, health, and financial needs. For women, childbirth can lead to career interruptions, making it challenging to re‑enter the workforce and hindering their career advancement. Such interruptions often contribute to lower employment rates and earnings for women at older ages. Those who maintain steady employment at mid-career are better positioned to continue working later in life, while individuals who experience unemployment or job instability in their earlier years are more likely to retire or leave the workforce earlier. As mentioned above, unemployment can also be persistent. Older workers are less likely to become unemployed compared to their younger counterparts, but when they do lose their jobs, they face significantly higher risks of long-term unemployment. As a result, job loss in one’s 50s or 60s can have lasting effects on labour market attachment, income security, and retirement pathways.

These results are also highly stratified by education. For those who were steadily employed in their 50s with tertiary education, 90% were employed at some point in their 60s (Annex Figure 3.A.8), this share falls to 60% for those with below upper secondary education who were nevertheless employed continuously in their 50s. A similar pattern emerges for those who had a high intermittent employment pattern in their 50s. The strenuousness of jobs among low-skilled workers resulting in more periods of sickness and difficulties in working until a later age may also play a role in explaining this pattern. For those who were employed 1‑49% of the time in their 50s (low intermittent), the pattern reverses with those with low education being more likely to employed in their 60s (34%) compared to those with tertiary education (19%).

Figure 3.4. Being employed in your 50s is associated with a greater likelihood of employment in your 60s
Copy link to Figure 3.4. Being employed in your 50s is associated with a greater likelihood of employment in your 60s

Likelihood of working in one’s 60s by employment stability in one’s 50s

The relationship between experience of intermittent employment in one’s 50s and employment during one’s 60s is confirmed in regression analysis which allows further investigation of the factors that might account for the bivariate relationship shown above (Figure 3.5). Overall, employment stability in one’s 50s is strongly associated with working at age 62 (or age 63, if status at age 62 is not available). This is consistent with previous findings in the literature (Berkman and Truesdale, 2022[25]) and highlights the necessity of fostering employment opportunities at a younger age as a foundation for sustaining longer careers. People who have not been employed in their 50s (steady out) are 41 percentage points less likely to be employed at age 62 (relative to those in their 50s who were always in employment). In contrast those who were employed in their 50s between 80‑99% of the time (high intermittent) were 10 percentage points less likely to be employed at age 62.

Women, individuals without a college education, and those who report poor health are significantly less likely to remain employed in their 60s, even when considering their job status in their early 50s Since these groups already experience lower employment rates in their early 50s, this trend highlights a concerning expansion of employment disparities in mid-life. When factoring in employment status in the early 50s, women are 3 percentage points less likely than men to be working at age 62. For individuals without a college degree, the employment gap stands at 13 percentage points, while those reporting poor health in their early 50s also face a gap of 13 percentage points. Absent policy measures, labour market segmentation is further widening over the course of a career.

Figure 3.5. Not being employed in one’s 50s is correlated with not being employed in one’s 60s
Copy link to Figure 3.5. Not being employed in one’s 50s is correlated with not being employed in one’s 60s

Estimated association between each characteristic in one’s 50s and the probability of being employed at age 62

3.1.5. Good job quality is important for ensuring that older workers remain employed

Job quality is a key factor in sustaining the employment of late career workers. Quality of work encompasses a range of factors, including earnings, autonomy, skill use, job security, working time arrangements, and workplace support. These dimensions are not only central to workers’ job satisfaction but are directly linked to health and employability in later life. Moreover, they have a direct impact on business performance, including productivity, profitability, and staff retention (OECD, 2023[26]). For older manual workers in particular, poor or deteriorating job quality significantly increases the risk of exiting employment, with negative mental and physical health acting as mediating factors (in Germany) (Stiller, Ebener and Hasselhorn, 2023[27]). In contrast, among non-manual workers, job quality work is less strongly associated with early exit from employment, suggesting that other factors may be more influential for this group (Stiller, Ebener and Hasselhorn, 2023[27]). This underscores the importance of tailoring interventions to specific occupational groups.

Evidence shows that both higher own wages reduce quit rates as well, but that peer wages also have effect quit rates, specifically, if peers receive higher raises (while one’s own raise is lower), this increases the likelihood of quitting (Dube, Giuliano and Leonard, 2019[28]; Card et al., 2012[29]; D’Ambrosio, Clark and Barazzetta, 2018[30]). Additionally, self-reported job satisfaction has consistently been recognised as a strong indicator of employee separations and quits, independent of salary levels (Freeman, 1978[31]; Clark, 2015[32]; Lévy-Garboua, Montmarquette and Simonnet, 2007[33]).

Assessing the quality of working environments across countries is challenging due to the varied methods countries use to gather data and the general lack of comprehensive information on working conditions. However, the European Working Conditions Telephone Surveys (EWCTS), conducted by Eurofound in 2021, provide comparable data for 25 OECD European countries. According to the OECD’s conceptual framework, the quality of the working environment is evaluated based on the prevalence of job strain – define as a condition in which job demands (aspects of work that require continuous physical or mental effort and may harm well-being) outweigh the job resources (features of a job that can support motivation and coping mechanisms) available to workers (OECD, 2024[3]). On average for the 25 OECD European countries for which data are available, 9% of workers aged 55‑64 experienced job strain in 2021, compared to 12% of those aged 30‑54 and 13% of those aged 16‑29 (Figure 3.6). A few countries clearly exhibit job quality that is better than others, with the share of strained workers aged 55‑64 below 10% in Estonia, Portugal, Luxembourg, Slovenia and Hungary. In Sweden, the United Kingdom and Latvia the share of strained workers in this age group is 15% or above.

Figure 3.6. Overall job quality tends to be higher for older workers
Copy link to Figure 3.6. Overall job quality tends to be higher for older workers

Job strain in 25 European OECD countries by age group, 2021

A safe and supportive work environment is crucial for maintaining workers’ health, reducing absenteeism, and sustaining productivity. High physical demands – such as heavy lifting, awkward postures, or fast work pace – are likely linked to early labour market exit (d’Errico et al., 2021[34]; Söderberg et al., 2021[35]; Stiller, Ebener and Hasselhorn, 2023[27]), while strong social support can help retain older workers. According to data from the OECD job quality database, exposure to physical risks (e.g. noise, chemicals) and demands (e.g. lifting loads) generally declines slightly with age. Only 17% of men aged 55‑64 report high physical risks, compared to 23% of men aged 16‑29 (Figure 3.7, Panel A). Similarly, exposure levels for older women decline from 28% at age 16‑29 to 23% at age 55‑64. Data for the United States from the 2015 American Working Conditions Survey (AWCS), reveal that 55.5% of Americans aged 50‑71 say their jobs involve exposure to physical risks such as vibrations from machinery, significant noise, extreme temperatures, breathing smoke or fumes or handling chemical products at least a quarter of the time (Maestas et al., 2017[36]).

Although older workers are generally less exposed to physical risks and demands, a substantial share still face high levels of exposure. Among workers aged 55‑64, over 50% of health professionals, cleaners and helpers and personal care workers report significant physical risks (Figure 3.7, Panel B). These risks largely reflect the nature of the occupations with younger workers facing similar exposure in most occupations, however in many cases the exposure among older workers is substantially lower than for younger workers suggesting that the task content within these occupations differs by age group.

Figure 3.7. The physical risks in some jobs are high for older workers
Copy link to Figure 3.7. The physical risks in some jobs are high for older workers

Career prospects, as measured by a specific module of the EWCTS, are available for a subset of respondents who were asked whether their job offers good opportunities for advancement. While career development is widely recognised as a lifelong process (Hunter‐Johnson et al., 2020[37]; OECD, 2024[38]), perceived opportunities decline with age. Just 22% of women and 30% of men aged 55‑64 believe they have good advancement prospects, compared with 42% of men and women aged 16‑29 (Figure 3.8, Panel A). In the United States, only 27% of workers aged 50‑71 state that their job offers good prospects for career advancement, compared to 40% for those aged 35‑49 and 50% for those aged 25‑35 (Maestas et al., 2017[36]).

Flexible working conditions are increasingly vital for supporting older workers across OECD countries. Flexible work arrangements can help older employees manage health concerns, caregiving responsibilities, and the transition into retirement, thereby enhancing their ability to remain in the workforce longer. Moreover, flexible work schedules contribute to improved job satisfaction and retention among older workers, benefiting both individuals and employers by maintaining a skilled and experienced workforce. In European OECD countries with available data, the availability of flexible working conditions tends to increase with age, at least for men; remaining relatively static for women (Figure 3.8, Panel B). In the United States, 37% of workers aged 55‑71 report having the ability to adapt their hours within certain limits, which is very similar to that of younger workers (Maestas et al., 2017[36]).

Figure 3.8. Career prospects, flexible working conditions and job autonomy are key aspects of job quality that vary significantly by age and gender
Copy link to Figure 3.8. Career prospects, flexible working conditions and job autonomy are key aspects of job quality that vary significantly by age and gender

Autonomy and task discretion are vital components of job quality, particularly for older workers (OECD, 2014[39]). Older workers typically experience greater autonomy than younger workers (Figure 3.8, Panel C). Research indicates that older employees who experience greater autonomy – such as control over work pace, methods, and scheduling – report higher job satisfaction and are more likely to remain in the workforce for longer. Maestas et al. (2023[40]) uses stated‑preference experiments to elicit workers’ willingness to pay for different job attributes, and find that older workers prefer jobs with greater autonomy (as measured by the ability to set their own schedule, work by themselves, etc.) as well as jobs that involve more moderate (relative to heavy) physical activity or more sitting. Moreover, autonomy allows older workers to leverage their experience and skills effectively, fostering a sense of purpose and engagement (Maestas et al., 2023[40]). Workers in the United States have a great deal of autonomy, with 73% of workers aged 55‑71 reporting that they can choose or change their methods of work (Maestas et al., 2017[36]).

Box 3.1. Jobs differ in how desirable they are for older workers

Copy link to Box 3.1. Jobs differ in how desirable they are for older workers

While the physical intensity of jobs has a direct effect on workers’ ability to perform the job as they age, other job characteristics may also matter for worker motivation and indirectly affect labour productivity and employment rates. Older workers have been shown to value job amenities, such as lower physical intensity, flexible schedule and work autonomy, more than younger individuals. A move from the worst to the best job in terms of amenities has been estimated to be valued as equivalent to a 48% wage increase by 25‑34 year‑olds and a 75% increase by those aged 62‑71 (Maestas et al., 2023[40]).

The most significant differences in the willingness to pay for job attributes between the age groups were found for physical activity, with a move from a physically demanding job to one with moderate physical activity valued by 62‑71 year‑olds as equivalent to a 31% wage increase (9% for 25‑34 year‑olds). Schedule flexibility and work autonomy are also more valued at older ages – equivalent to a 15% and 12% wage increase, respectively. Older workers also preferred to work alone and be evaluated based on their own work rather than the work of the team (Maestas et al., 2023[40]).

These job attributes render some occupations more “age‑friendly” than others. For example, occupations such as ICT professionals, Business & Administration professionals and Science & Engineering professionals are the most “age‑friendly” not only because they do not require heavy physical activity but also because they allow workers to set their own schedules and plan their work (Annex Figure 3.A.9). In contrast, Food Preparation Assistants, Labourers in Industry, and Assemblers, the least “age‑friendly” occupations on this metric, offer workers less flexible schedules and fewer opportunities to plan their own work.

Over the last decades, occupations have become more accommodating to the preferences of older workers. Between 1990 and 2020, around three‑quarters of occupations in the United States became more “age‑friendly” (Acemoglu, Søndergaard Mühlbach and Scott, 2022[41]). Beyond the United States, the “age‑friendliness” of jobs also increased in the last decade in most OECD countries (Figure 3.9), however, significant differences in the “age‑friendliness” of jobs persist – see also Chapter 4.

Figure 3.9. There are significant differences in the “age‑friendliness” of jobs across OECD countries
Copy link to Figure 3.9. There are significant differences in the “age‑friendliness” of jobs across OECD countries

Average age‑friendliness index (0‑100) of jobs, by country

Work capacity at older age has been rising over time, but uncertainties and inequalities remain

Recent research on health and older workers provides nuanced insights into the evolving relationship between ageing, health status, and labour market participation. Evidence shows that there are significant improvements in the health of older cohorts (International Monetary Fund, 2025[42]; Kotschy, Bloom and Scott, 2024[43]; Lopez Garcia, Maestas and Mullen, 2025[44]). Across many countries, individuals in their 60s and 70s are physically and cognitively more capable than earlier generations at the same age. For instance, the International Monetary Fund (2025[42]) finds that in a sample of 41 advanced and emerging economies, the cognitive capacity of a 70‑year‑old in 2022 was comparable to that of a 53‑year‑old in 2000, a change associated with increased labour market attachment, hours worked, and earnings. Nonetheless, these benefits are unevenly distributed, with persistent disparities across countries and socio-economic groups.

Lopez Garcia, Maestas and Mullen (2025[44]) offer a detailed account of work capacity based on the match between individuals’ functional abilities and job demands in the United States. They find that average abilities remain high and relatively stable up to age 70, especially in cognitive domains. Their “work capacity” metric – derived by aligning individual abilities with occupational requirements – shows that many older individuals retain the capacity to perform a large share of jobs, even if they report health issues by traditional metrics. Moreover, work capacity explains variation in labour force participation independently of standard health indicators, highlighting the importance of assessing ability-demand fit in employment policy for older adults.

In contrast, also for the United States, Cutler, Meara and Stewart (2025[45]) show that while work capacity remains relatively high for people in their early 60s, recent the United States’ cohorts are experiencing earlier onset of impairments – particularly in pain and cognition – than previous generations. These issues are more acute among individuals with lower education, with less than half of those without a high school diploma predicted to have the capacity to work full-time by age 62‑64. Thus, although overall work capacity remains substantial, its distribution is becoming more unequal. Together, these studies suggest that while healthier ageing supports extended working lives, policies must account for disparities in health and ability across the workforce to be effective and fair.

As workers reach 55, part-time work and self-employment become increasingly common

Working time directly affects employees’ health and well-being, as well as being an important measure of labour utilisation (the intensive margin). Long hours increase the risk of health problems and exposure to workplace hazards. Striking a balance between work and personal life is especially important for sustaining motivation, capability, and engagement as workers grow older. In OECD countries, there has been a general decline in average annual hours worked over recent decades – see Chapter 1. On average across OECD countries there was a 3.5% decline in average usual hours worked for men aged 55‑64 between 2001‑03 and 2021‑23, and a 2.7% decline for women (Annex Figure 3.A.10). This is consistent with the overall decline in average usual hours worked of 3.2% for men and 1.6% for women aged 15‑64. Korea has historically been among the OECD countries with the longest working hours but has witnessed a decline over this period in usual hours worked of 16.5% for men and 14.8% for women (aged 55‑64), slightly below the decline for the population aged 15‑64.7

Transitioning to part-time work and self-employment is common among older workers. For women part-time employment rises during the reproductive years – peaking at 33.7% on average among OECD countries with available data at age 39 – and then again at older ages to 64.7% on average by age 69 (Figure 3.10, Panel A). The share of men engaged in part-time work remains below 10% on average until age 55, before rising exponentially to reach 50.3% by age 69. The share of self-employment women rises sharply from age 60 to reach 27.9% by age 69, while for men the share who are self-employment rises steadily from a young age to reach 44.7% by age 69.

The motivations behind the shift to part-time work and self-employment are multifaceted. Many older individuals are drawn to part-time work and self-employment due to the flexibility and autonomy it offers, allowing them to adjust their work schedules and responsibilities to better align with personal preferences or health considerations (Ameriks et al., 2020[46]). This flexibility can be particularly appealing for those seeking to phase into retirement gradually or to remain active in the workforce without the constraints of traditional employment structures. Additionally, self-employment can serve as a viable option for older workers who face age‑related barriers in the conventional job market, providing an alternative pathway to maintain income and engagement.

Across all age groups, workers with lower educational attainment are more likely to be employed part-time due to the inability to secure full-time positions. Specifically, over 40% of workers aged 45‑54 with low education levels work part-time for this reason, compared to 20% and 15% of their peers with middle and high education levels, respectively (Annex Figure 3.A.11). This disparity underscores the necessity of equipping workers, particularly those at risk of being stuck in poor-quality jobs, with the skills needed to advance to better employment opportunities. Older workers may encounter additional barriers in the labour market, such as difficulties in finding suitable positions, which must be addressed to facilitate effective career mobility.

Figure 3.10. The share of part-time work and self-employment rises with age
Copy link to Figure 3.10. The share of part-time work and self-employment rises with age

Not all transitions to part-time work or self-employment are voluntary. A significant minority of workers across OECD countries take up part-time roles due to the lack of full-time opportunities. On average approximately 16% of men and 13% of women aged 55‑69 working part-time do so because they are unable to find full-time employment (Figure 3.10, Panel B). The share is particularly high in Italy and Spain, where 54% and 52% of women aged 55‑69, respectively, work part-time involuntarily. Among men, this reaches 55% in Italy and 48% in Spain. In addition, involuntary part-time employment disproportionately affects older workers in elementary, service and sales occupations (Figure 3.10, Panel C). This involuntary shift can lead to insufficient income and limited opportunities for wage growth, contributing to underemployment among this demographic (Bell and Blanchflower, 2021[47]).

Given the high prevalence of self-employment among older workers, labour market policies should recognise the importance of diverse forms of work (such as temporary-work, agency-work, self-employment and telework) in extending working lives. While self-employment offers valuable opportunities for older workers, it also carries risks. Since self-employed workers typically lack access to general public benefits like health insurance, pensions, and unemployment protections, they have to provide for such protection through their own financial arrangements (OECD, 2019[48]). Self-employment can often lead to difficulties such as securing adequate retirement savings and accessing affordable healthcare (Abraham, Hershbein and Houseman, 2021[49]). The absence of employer-sponsored benefits necessitates careful financial planning to ensure long-term security. Moreover, the success of self-employment ventures can be influenced by factors such as prior experience, industry knowledge, and the ability to adapt to changing market conditions (Abraham, Hershbein and Houseman, 2021[49]). More educated workers are much more likely to be self-employed compared to lower educated workers, often reflecting greater access to resources, networks, and autonomy – factors that contribute to disparities in labour market outcomes. However, among older adults, self-employment can also reflect constrained choices, particularly when driven by employer reluctance to hire older workers and a lack of flexible work options. Policies should be designed to provide older workers with as much choice as possible with regard to options such as part-time work and self-employment by not advantaging or disadvantaging either regime economically.

3.2. Strengthening incentives for longer working lives

Copy link to 3.2. Strengthening incentives for longer working lives

Over the past two decades, in response to an ageing population and the growing strain on pension systems, many OECD countries have raised statutory retirement ages, restricted access to early retirement schemes, and created incentives to work beyond traditional retirement ages. The purpose of these policy changes has been to improve the sustainability of public finances by extending working lives and reducing pension expenditures and to limit the negative impact of ageing on retirement income adequacy.

Many of these reforms involve raising the statutory retirement age (SRA; the age set by law at which individuals are eligible to claim the state pension or public retirement benefits, either fully or partially) or early retirement age (ERA; the first age at which a pension can be claimed, often with reduced pension or benefits) to encourage longer workforce participation. Most recently, France has raised the minimum retirement age from 62 to 64 and will phase out some special pension schemes (OECD, 2023[50]). Sweden and the Slovak Republic strengthened the link between retirement age and life expectancy, a move now adopted by one in four OECD countries, including Denmark, Estonia, Finland, Greece, Italy, the Netherlands and Portugal (OECD, 2023[50]). Costa Rica has increased the normal retirement age by three years for both men and women and restricted early retirement access. Czechia has reduced the window for early retirement from five to three years before the statutory age. In some cases, such as Denmark, Estonia, Italy, the Netherlands and Sweden, the normal retirement age could reach 70 years or more for the 2000 birth cohort if life expectancy continues to rise as projected and the legislated links with the retirement age are effectively implemented over time (OECD, 2023[50]). Denmark adopted a law in June 2025 to raise the retirement age to age 70 by 2040 for people born after December 1970.

The average labour market exit age increased in most countries between 2002 and 2022, by an average of 3.1 years for women and 2.6 years for men (Figure 3.11, Panel A), reaching an average of 63.1 years for women and 64.4 years for men in 2022 (Annex Figure 3.A.12). Estonia, Lithuania and Poland have recorded the largest increases in the average age of labour market exit for women, and Hungary, the Netherlands and Poland for men. For women the average age of labour market exit has declined in Costa Rica, Iceland and to a lesser extent also in Colombia, Luxembourg and Switzerland. For men there has been a decline in Colombia and Mexico.

At current normal retirement ages (NRA; the eligibility age to pensions without penalty in all schemes combined after a full career from age 228) there remains significant scope for raising the average age of labour market exit without increasing the NRA, because the average age of labour market exit is below the current NRA in 25 out of 38 OECD countries for women (and in 23 countries for men) (Figure 3.11, Panel B). In these countries efforts could be made to raise the effective age of labour market exit through improvements in opportunities and employability (see subsequent sections) in addition to raising statutory retirement ages. In the remaining countries the average age of labour market exit is above the current NRA, for example in Türkiye where current NRA is 49 for women and 52 for men, while the average age of labour market exit is 60.2 and 61.5 respectively.

Mandatory retirement rules give employers the option to end the contracts of workers at a certain age. These rules have become less common in recent decades but remain more common in the public sector than the private sector (OECD, forthcoming[51]). Currently, 18 out of 37 OECD countries for which there is available information have some form of mandatory retirement.9 Mandatory retirement across OECD countries takes various forms, differing in strictness and application (OECD, forthcoming[51]). In some countries like Finland and Luxembourg, particularly in the public sector, employment is legally terminated at a set age, though workers can be rehired. Most countries legally require public servants to retire at or after the normal retirement age, with Japan and Korea as exceptions. Many allow employment extensions based on need or performance. In the private sector, the most common approach allows – but does not require – employers to end employment at a certain age through contract clauses or reduced employment protections, as seen in countries like Germany, the Netherlands and France. Norway and Sweden have both types of systems, typically kicking in at or after the normal retirement age. Some countries, including Japan and Korea, also permit early termination or changes to employment conditions, such as reduced wages or reemployment under different terms, to encourage continued employment of older workers.

Mandatory retirement is not a first-best policy instrument; it is often used to circumvent rigid employment and wage regulations, especially where seniority-based pay leads to a mismatch between wages and productivity or where dismissing underperforming workers is difficult. Rather than relying on mandatory retirement, these challenges should be addressed directly through targeted labour market reforms, such as more flexible wage‑setting and dismissal procedures.

Figure 3.11. The average age of labour market exit has risen in most OECD countries since 2002, yet the average age of exit is often below the normal retirement age
Copy link to Figure 3.11. The average age of labour market exit has risen in most OECD countries since 2002, yet the average age of exit is often below the normal retirement age

3.2.1. The labour market effects and behavioural responses of raising the eligibility age for pensions

Pension reforms typically elicit a strong employment response

Large employment increases have consistently been found in different countries in response to increases in both ERAs and SRAs.10 Pension reforms in the Netherlands gradually increased the statutory retirement age from 65 years in 2012 to 66 years and four months in 2019, resulting in a 21.2 percentage point increase in the employment rate (Rabaté, Jongen and Atav, 2024[52]). In Austria, increasing the ERA by one year raised employment rates among affected men and women by approximately 9.8 and 11 percentage points, respectively (Staubli and Zweimüller, 2013[53]). The employment response was strongest among high-wage and healthy workers, while low-wage and less healthy workers were more likely to seek alternative exit routes. In Germany, Geyer and Welteke (2021[54]) found a 13.5 percentage point increase in the employment rate for women following the abolition of the early retirement age for women in 1999. Reforms in Japan gradually increased the pensionable age for Employees’ Pension Insurance from 60 to 65, with evidence showing that each one‑year increase in pension eligibility led to a 7‑8 percentage point rise in employment among affected individuals (Nakazawa, 2025[55]). In Denmark, reforms in 2011 delayed pension eligibility by six months, leading to increased labour force participation and delayed retirement (García-Miralles and Leganza, 2024[56]).

Pension reforms affect not only individual retirement decisions but also those of spouses, such that policies targeting individual retirement behaviour can generate significant spillover effects within households. Research from Denmark, Norway and Switzerland shows that when once spouse becomes eligible for a pension, the other often adjusts their retirement timing as well – typically to retire together (García-Miralles and Leganza, 2024[13]; Lalive and Parrotta, 2017[14]; Johnsen, Vaage and Willén, 2022[57]; Kruse, 2021[58]). This joint retirement behaviour is largely driven by complementarities in leisure and shared financial planning. Evidence from Australia and Italy shows that raising pension ages can delay retirement for both spouses, supporting longer workforce participation for women (Atalay, Barrett and Siminski, 2019[59]; Carta and De Philippis, 2023[60]).

There are several potential mechanisms driving these employment responses, however their relative importance is still not well understood and likely depends on institutional details and the characteristics of those nearing retirement (Coile et al., 2025[61]). Understanding the mechanisms through which pension reforms affect employment is essential for designing effective and fair policies. It helps policy makers anticipate how different groups will respond – whether due to financial need (credit constraints), reduced pension wealth (wealth effects), or behavioural norms. This allows reforms to be better targeted, reduces the risk of unintended hardship (especially for low-wealth individuals), and improves predictions of reform impacts across different contexts. It also has implications for understanding the distributional effects of changes to pension schemes which are important to understand in the context of the often‑difficult political economy of reforms.

Raising the retirement age can influence decisions to remain employed through income effects – such as reduced pension wealth prompting delayed retirement (Atalay and Barrett, 2015[62]). Employer demand also plays a role; for instance lifting mandatory retirement rules in France influenced employment patterns (Rabaté, 2019[63]). Credit constraints and wealth effects are key too. In the United Kingdom, increasing women’s early retirement age from 60 to 66 led to the largest employment gains among credit-constrained individuals, with a 13 percentage point larger increase than those not facing such constraints (Coile et al., 2025[61]). Behavioural effects are also important – people are much more likely to retire at statutory retirement ages than at other points with similar financial incentives, suggesting strong social norms around these ages (Seibold, 2021[64]; Rabaté, Jongen and Atav, 2024[52]; Geyer and Welteke, 2021[54]; Coile et al., 2025[61]; Gruber, Kanninen and Ravaska, 2022[65]). As a result, raising the statutory retirement age can lengthen working lives even without large financial incentives.11 Pension systems should therefore be designed with both financial incentives and behavioural factors in mind.

Changes to pension policies should also consider the implications of longer working for physical and mental health. A key consideration with respect to changes in pension ages is health (Berkman and Truesdale, 2022[25]; Berger et al., 2022[66]; Lopez Garcia, Maestas and Mullen, 2025[44]). While there is evidence on the effects of health on employment in later life – see for example Blundell et al., (2023[67]), there is also evidence that remaining in work as a result of delayed retirement has a strong causal impact on cognitive function and physical disability. For example, Banks et al., (2025[68]) leverage a pension reform in the United Kingdom that raised the State Pension Age between 2010 and 2017 for women aged 60‑63. Using this natural experiment12 the study finds that continued employment significantly improves cognitive performance (notably in memory and verbal fluency) and physical mobility (as measured by walking speed and reduced mobility problems). However, the effects are heterogenous across subgroups; the benefits are especially strong for single women and those in more physically active jobs. One implication of the above results is the role for policy in supporting transitions into types of work that are more conducive to the well-being of older workers. See for example Chapter 5 and OECD (2024[69]).

There is little evidence of strategic take‑up of disability or unemployment insurance by those affected by pension reforms

Nevertheless, while the evidence suggests that raising retirement ages can be effective in extending working lives for those already employed, it has limited impact on individuals who are already in receipt of disability insurance (DI) or unemployment insurance (UI) or who have already exited the labour force. Therefore, pension reforms need to account for labour market conditions and access to alternative welfare programmes, recognising that those who are unable to continue working for longer are likely to access disability or unemployment insurance programmes, at least in the absence of concerted efforts to improve both the health of workers and job quality.

Pension reform can generate two types of substitution effects, potentially leading to increased reliance on disability or unemployment insurance. Mechanical substitution effects occur passively as individuals remain longer in their pre‑reform labour market state due to an increase in the SRA. In contrast behavioural substitution effects occur when individuals actively change their behaviour in response to the policy change, such as strategically entering DI or UI because they cannot continue working until the new retirement age. Evidence from a range of studies in different countries suggests that the substitution effects of recent pension reforms have been largely mechanical rather than behavioural. If workers had been strategically moving into DI to compensate for the higher SRA, then it would be possible to detect an increase in DI or UI claims before the old retirement age (i.e. before they were directly affected by the reform).

For example, reforms in the Netherlands, led to a stepwise increase in the SRA from 65 years in 2012 to 66 years and 4 months in 2019. Rabaté et al. (2024[52]) find that this led to a 60 percentage point decline in the share of people in retirement between the old and new retirement age. About a third of these people were employed (+21 percentage points), while another third (22 percentage points) were in social insurance (primarily disability insurance). Rabaté et al. (2024[52]) argue that these effects were mainly mechanical rather than behavioural – most workers simply remained in their pre‑SRA labour market state longer and a significant concentration of retirements was observed at the new SRA (Rabaté, Jongen and Atav, 2024[52]).13 They find no significant effect of workers deliberately entering DI or UI as an alternative retirement pathway. In other words, the increase in DI claims was a natural consequence of raising the SRA, which forced some older workers – particularly those in poor health – to stay in the labour market longer and eventually transition to DI when they could no longer work.14

Similarly, in Germany, Geyer and Welteke (2021[54]) find that the rise in unemployment and inactivity rates following the 1999 pension reform – which increased the ERA for women from 60 to at least 63 – was largely a mechanical effect. There is evidence of only a small amount of active substitution into unemployment, disability pensions, and inactivity. While unemployment rates rose by 5.2 percentage points, this increase was mainly due to women remaining unemployed longer rather than actively substituting from employment into unemployment. Geyer and Welteke (2021[54]) acknowledge that there were distributional consequences of the reform, noting that the main distributional effect of the reform was a result of the persistence of people in their current labour market status. They found that women in eastern Germany were more affected by the reforms and faced higher unemployment rates at ages 60‑62 than in the west.15

Nevertheless, understanding the substitution effects between pensions and DI is crucial when designing pension reforms. While restricting access to pension savings may extend working lives, it may also lead to increased reliance on DI benefits. As the experience of Norway shows, allowing flexible pension withdrawals can also help reduce DI claims while still encouraging continued employment (Hernæs et al., 2024[70]). Norway’s 2011 reform allowed some workers to withdraw their pension savings earlier, which significantly reduced DI claims. Access to own pension funds lowered entry into DI programmes after age 60 by as much as 20‑25%. This suggests that workers who might otherwise have sought DI benefits due to financial constraints were able to rely on their pension savings instead.

3.2.2. Pension reforms for those in hazardous jobs

Workers in hazardous or arduous jobs are more likely to experience poor health, but relying on broad occupational categories to grant early retirement is increasingly viewed as ineffective. Many jobs have evolved thanks to technological change, and not all tasks within a given occupation remain physically demanding or dangerous. As a result, broad early retirement schemes risk being poorly targeted, offering benefits to individuals who may not face significant risks (OECD, 2023[50]).

Where early retirement provisions remain necessary, such as for jobs involving acute physical and cognitive demands (e.g. police, firefighters, military), they should be narrowly targeted and evidence‑based (OECD, 2023[50]). Innovations in some countries, like Austria and France, now link eligibility to specific job characteristics (such as night work) rather than job titles. A more sustainable and equitable approach involves redesigning workplaces, supporting career transitions, and promoting retraining, so that workers in difficult roles can stay active longer and retire in better health (OECD, 2023[50]).

3.2.3. Flexible retirement may help facilitate longer working lives

In the context of demographic ageing, pension systems and labour markets must adapt to support longer and more diverse working lives. One key response to this demographic shift is the promotion of flexible retirement pathways, which offer individuals greater choice in how and when to retire. These pathways enable older workers to gradually reduce their workload or combine part-time work with pension benefits, accommodating differing capacities and preferences as people age.

A variety of flexible retirement options exist among OECD countries, including flexibility about when to retire via deferred retirement, differential pensionable ages, flexible pensionable ages, and early retirement (OECD, 2017[71]; Spasova, Deruelle and Airoldi, 2025[72]). The second main form of flexibility involves combining a pension with income from work. In this case three options are generally available i) claiming a full pension while continuing to work after reaching pensionable age, ii) claiming an early pension and continuing to work, and iii) claiming a partial pension and continuing to work part time (Spasova, Deruelle and Airoldi, 2025[72]).

Flexible retirement schemes do not always have the effect of extending working lives.16 A review of partial retirement schemes in Europe in 2016 examined found no scheme unambiguously extended working lives for all participants (Eurofound, 2016[73]).17 The report found that the effectiveness of these schemes depends on factors such as the availability of early retirement options and scheme design, and concluded that partial retirement should be structured to be an “interesting” alternative to full early retirement while still incentivising full-time work whenever possible (Eurofound, 2016[73]). If implemented too early or with excessive working hour reductions, it may lead to an overall decrease in labour supply rather than extending working lives. This is consistent with an analysis of partial retirement in Germany which found positive labour supply effects when individuals have access to partial retirement from two years before the ERA, but if partial retirement is available too early (e.g. from age 60), it can crowd out full-time work and reduce total employment volume (Haan and Tolan, 2019[74]).18

Flexibility over when to retire

Deferred retirement is the most common option, available in nearly all countries, allowing individuals to continue working beyond the pensionable age, often with financial incentives such as increased pension accrual rates (ranging from 3% to 10% per year) or lump-sum bonuses in some cases (Spasova, Deruelle and Airoldi, 2025[72]). These financial incentives are not generally designed to incentivise later retirement unless they are higher than what actuarial fairness requires. An actuarially neutral bonus/penalty is a matter of fairness: avoiding the situation where people retiring early receive lower lifetime benefits. However, they do remove disincentives to delay retirement – the lack of a bonus or penalty means that a person loses out if they do not take their pension at the earliest opportunity.

Differentiated pensionable ages exist in many OECD countries and allow workers with long careers, particularly those in physically demanding jobs, to retire earlier without a pension reduction. Flexible pensionable ages, found in Finland, Sweden and Norway, allow individuals to choose their retirement age within a predefined range with actuarially adjusted benefits to encourage later retirement (Spasova, Deruelle and Airoldi, 2025[72]). For example, Norway’s 2011 pension reform introduced a flexible retirement age with actuarial (neutral) adjustment of the pension. Neutral withdrawal rules have also been seen as a prerequisite for freely combining work and pension without a reduction in the pension. Actuarially adjusted benefits also make it possible to allow for a free combination of income from work and pension without an earnings test.

Combining work and pensions

Promoting the combination of work and pension income has been a common reform among OECD countries in recent years. The simplest way to combine work and pensions is to claim a full pension at the normal or statutory retirement age while continuing to work part- or full-time, which is allowed in 17 OECD countries. (OECD, forthcoming[51]). In comparison, Türkiye is the only OECD member where individuals are never permitted to receive a pension while continuing to work. Countries such as Canada, Czechia, Latvia, Lithuania and Slovenia restrict people from working if they are receiving early-retirement benefits. These regulations effectively force individuals to choose between employment and pension income, creating a disincentive to remain in the workforce if the pension amount is enough to support their preferred lifestyle.

However, the share of older workers who continue working on receipt of a pension is relatively low across OECD countries with available data. On average 21.7% of people aged 50‑69 continued working at least part-time in 2023, 13.2% without making any changes, and 8.5% continuing to work with changes such as changing job, working fewer hours or continuing to work in a second job while stopping work in their main job (Figure 3.12, Panel A). Estonia (55%), Norway (47.6%) and Latvia (45%) are the countries with the highest share of people reporting that they continue some form of work, while the share combining work and pensions is lowest in Greece (4.4%), Croatia (5.2%) and Spain (5.6%).

Figure 3.12. The share of people combining pension and labour income remains low at older ages, but enjoying work is the main reason for continuing to work while receiving a pension
Copy link to Figure 3.12. The share of people combining pension and labour income remains low at older ages, but enjoying work is the main reason for continuing to work while receiving a pension

Key motivations for continuing to work after receiving a pension include enjoyment of work and financial reasons (Figure 3.12, Panel B). For people aged 50‑69 who combined work and pension receipt at the start of their retirement, the main motivation on average across the available countries was enjoyment of work and being productive (36.8%), followed by financial necessity (27.3%). Financial attractiveness of continuing to work was reported as the main reason by 8.6% on average, maintaining social integration by 8.2%, while 2.4% continued to work because their partner was still working.

Some countries do allow people to receive pension and labour income, but various conditions or limits apply (OECD, 2017[71]). This can include limits on hours worked or earnings or making employment less attractive by requiring people to make social security contributions without building up pension entitlements, such as in France, Greece and the Slovak Republic both before and after the normal retirement age, as well as in Belgium, Germany, Luxembourg, Slovenia and Spain after the statutory retirement age (OECD, forthcoming[51]). Australia has both earnings and assets tests for the Age Pension, and in Korea the basic old age pension is means-tested. However in many European OECD countries these types of restrictions have been removed (Spasova, Deruelle and Airoldi, 2025[72]; OECD, 2022[75]).19

Some countries allow for claiming an early pension while continuing to work – this is allowed in 17 European OECD countries, subject to a range of eligibility conditions such as age limit and/or income or hours of work limitations. Ten countries apply certain limits to the amount of work a person can do while receiving an early-retirement benefit (OECD, forthcoming[51]).

Claiming a partial pension while continuing to work is also possible in some OECD countries, but this practice is less widespread. In Finland, from age 61, workers can claim 25% or 50% of their earned pension without any obligation to continue working; people can decide if they want to continue working either part-time or full-time, or not at all. Evidence suggests that in general, partial retirement does not necessarily delay labour market exit (Hess, Bauknecht and Pink, 2018[76]; Baumann and Madero-Cabib, 2021[77]), however under specific conditions it might (Haan and Tolan, 2019[74]). Haan and Tolan (2019[74]) find that partial retirement increases the length of working lives when it is available from the early retirement age and designed to attract those who would otherwise retire early or exit via unemployment. It is most effective when combined with moderate pension payments during the partial retirement phase (e.g. 50%), which provide income support without heavily reducing future pensions. Crucially, such schemes should avoid encouraging full-time workers to reduce hours too early, and instead target those at risk of early labour market exit.

In France, progressive retirement is available from age 60 for those with at least 150 quarters of social security contributions, allowing workers to reduce their working time by up to 80% while receiving a partial pension proportionate to the hours reduced (Spasova, Deruelle and Airoldi, 2025[72]). Austria is reforming its partial retirement scheme to discourage early exit from the labour market (OECD, 2025[78]). Currently, employees within five years of the statutory retirement age can reduce their working time by 40‑60% with a 50% wage compensation for lost earnings, partly reimbursed to employers by the Public Employment Service. This can be done either continuously or via a block time model.20 However, from January 2024, public compensation for the block time model is being gradually phased out and fully eliminated by 2029. After that, only continuous part-time arrangements will be eligible for reimbursement – reinforcing the policy goal of extending working lives.

To promote flexible retirement, pension policies should be closely linked with broader labour market measures that support older workers. This includes fostering age‑friendly workplaces, expanding opportunities for training and upskilling, and encouraging flexible work arrangements such as part-time roles or remote work. Employers and social partners have a key role in ensuring a range of flexibility options (Box 3.2). At the same time, policies must recognise the diverse motivations for working longer – whether for financial reasons or personal fulfilment – by creating meaningful, flexible job opportunities that allow older workers to stay engaged and active. Governments should ensure that partial retirement is accessible to workers across different income and education levels, as lower-paid workers often need such flexibility but may struggle to afford it.

Creating structured programmes that allow employees approaching retirement to gradually reduce their working hours or responsibilities can also support knowledge transfer and succession planning while accommodating employees’ desires for a gradual transition. Evidence indicates that phased retirement schemes, mentoring programmes, and intergenerational team structures are particularly effective in supporting such transitions (OECD, 2024[79]). For example, countries like Germany and Finland have implemented formal frameworks enabling older workers to transfer expertise through mentoring and coaching, while maintaining reduced roles. These initiatives not only preserve institutional knowledge but also improve job satisfaction and retention among senior staff.

Box 3.2. Creating more flexibility in retirement in Denmark

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In Denmark, collective bargaining agreements play a key role in supporting flexible retirement options. In the private sector, senior workers five years before the statutory pension age generally have access to senior leave days as part of the agreements. These can be financed through free choice wage schemes or by redirecting part of their pension contributions.

Free choice wage schemes offer flexibility by allowing employees to allocate a portion of their earnings to extra pension contributions, direct salary, or paid leave. The leave can be used for various purposes, such as specific family-related needs or to finance senior leave days, subject to limitations set in the collective agreements.

These schemes have been gradually expanded since 2007. In the 2025 private sector bargaining round, free choice contributions in the were increased by 2 percentage points. For example, workers covered by the leading manufacturing sector agreement will have a free choice account of 11% of their wage by 2027.

In the 2024 collective agreements in the public sector, a somewhat similar flexibility was introduced for state employees. These agreements allow state employees to use some of their mandatory pension contributions above 15% to purchase a higher degree of flexibility from their employers. Employees can choose to receive it as salary, have it allocated to a savings scheme linked to their pension, or opt for a combination of both. This allows individuals to tailor their benefits according to their financial preferences. In addition, employees have a new option to save up time off for later use, for example in connection with childcare, or caring for sick parents. The savings can consist of time off in lieu and special holidays.

In the public sector senior days for workers close to retirement age have been part of the collective agreements for a longer time. They are not part of the new flexibility schemes. While both sectors now offer flexible retirement options, private sector schemes are typically broader and more established. Public sector arrangements are newer and apply to a narrower group but reflect a growing convergence in Danish retirement practices.

Employers may also be hesitant to introduce partial retirement schemes due to concerns about anti-discrimination laws as well as the perceived high costs of older workers (Johnson, 2011[80]). Employees, on the other hand, often worry about reduced pay, pension losses, or loss of benefits linked to full-time employment (Johnson, 2011[80]).

Communication and planning play a vital role in a successful phased retirement scheme. Employers should proactively discuss phased retirement options with employees well in advance of their anticipated retirement age. Providing financial planning resources, workshops, and one‑on-one consultations can help workers make informed decisions about their retirement transition. These discussions can also feature as part of a “mid-life career review” (OECD, 2024[38]). Financial literacy is crucial to ensure that individuals do not inadvertently reduce their pension benefits to unsustainable levels, highlighting the need for better education and transparency in pension systems (OECD, 2017[71]).

3.3. Boosting the hiring and retention of older workers

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While better incentives are important to keep mid-to-late career workers working longer; they also need better opportunities to do so. Therefore, an important challenge for more inclusive ageing and employment policies is encouraging employers to both hire and keep mid-to-late career workers in good quality jobs. Achieving this depends on how well companies handle age diversity and make the best use of all employees, regardless of their age. Government policies can play a role by influencing how employers approach the hiring and retention of mid-to-late career workers, ensuring the right balance between job flexibility and stability through labour market regulations.

Hiring rates for older workers are influenced by several key factors. While wages and benefits typically rise with age, there is no conclusive evidence that productivity increases at the same rate (see also Chapters 2 and 5), making employers cautious about hiring older workers. However, there is evidence which suggests that productivity can be enhanced through complementarities arising from multigenerational workforces (see Section 3.3.3). Some firms treat older and younger workers as substitutes, particularly where cost concerns dominate, while others see them as complementary, especially in roles requiring experience and knowledge transfer.

Employers may also perceive higher transaction costs in hiring older workers due to concerns about adaptability, job tenure, and work environment accommodations. Age discrimination remains a significant barrier, particularly for older women (Neumark, Burn and Button, 2019[18]; Neumark, 2024[81]). Technological change further affects demand, with some firms reluctant to hire older workers if they are seen as less adaptable, though automation can sometimes complement their skills. Addressing these challenges requires firm policies that adjust compensation structures, enhance training, and combat age‑related biases in hiring.

Hiring rates decline with age, with 9.5% of employees aged 55‑64 being newly hired in 2022, compared to 11.8% for those aged 45‑54 and an average of 15% for workers aged 35‑44 (Figure 3.13, Panel A). The decline with age likely reflects a combination of demand side factors, and also supply-side factors if older workers exhibit less inclination to change jobs, or possibly due to a desire for stability, satisfaction with their current roles, or concerns about facing age discrimination in new workplaces. Further, there has generally been no improvement in hiring rates over the last 25 years for older workers (Annex Figure 3.A.13, Panel B).21 Some countries such as Korea and Türkiye do have high hiring rates, however this may partly reflect low retention rates (Figure 3.13, Panel B).

3.3.1. Keeping people at the end of their career is difficult

Job retention is critical for extending working lives – by allowing older workers to continue using their experience and firm-specific skills (OECD, 2023[26]). Retaining workers in their current roles can offer stability, foster productivity, and reduce the costs associated with turnover. On average across the OECD, just over half of working 55‑59 year‑olds leave their employer by the time they are 60‑64 (Figure 3.13, Panel B). This compares to an average of 34.6% of 40‑44 year‑olds who leave by the time they are 45‑49. Although older workers have relatively long average tenure, by the time they reach their fifties, the likelihood that they will continue in the same job falls dramatically. Moreover, substantial differences emerge across countries. In Korea, Austria, Türkiye, Luxembourg and Slovenia, fewer than 40% of workers aged 55‑59 remain with their current employer after five years, although to some extent this will reflect relatively low retirement ages and either workforce exit or rehiring or job change in the case of Korea. By contrast, in Iceland, Portugal, Lithuania, the Netherlands and Germany, over 65% of workers in this age group are still in the same job five years later.

Figure 3.13. Many older workers struggle to find new jobs or hold on to their existing ones
Copy link to Figure 3.13. Many older workers struggle to find new jobs or hold on to their existing ones

3.3.2. Overcoming age discrimination in the workplace

Age discrimination in the labour market remains a significant barrier to employment for mid-to-late career individuals, despite legislative efforts to combat it in most OECD countries (Figure 3.14). Ageism can be institutional, interpersonal or self-directed. Resume audit studies have consistently shown that older job applicants often receive fewer interview invitations compared to their younger counterparts with equivalent qualifications (Neumark, Burn and Button, 2019[18]; Neumark, 2024[81]; Carlsson and Eriksson, 2019[82]; Oesch, 2020[83]). These field experiments reveal strong employer biases against older workers, particularly women and those nearing retirement age, and highlight how age‑based discrimination can occur even before employment begins.

This raises further concern about policies that remove employment protection once pension age is reached, potentially legitimising similar biases at the point of job exit. Evidence from France, the Netherlands and Sweden shows that lifting employment protection legislation (EPL) at or after full pension age facilitates de facto age‑based termination discrimination. In France, Rabaté (2019[63]) finds that employers use mandatory retirement provisions to dismiss older workers with reduced legal risk, accounting for a significant portion of the spike in retirements at full pension age. In the Netherlands, Rabaté, Jongen and Atav (2024[52]) show that the statutory retirement age marks a sharp increase in job exits due to automatic termination rules, with employer-side factors driving the bunching. In Sweden, Saez, Schoefer and Seim (2024[84]) provide clean causal evidence that removing EPL at age 67 leads to a 10% drop in employment and largely involuntary separations, especially targeting vulnerable groups.

There is compelling evidence that age‑stereotyped language in job ads – especially phrases implying deficiencies in health, personality, or technological skills – can deter older workers from applying for jobs and is associated with actual age discrimination in hiring (Burn et al., 2022[85]; Burn et al., 2022[86]). For employers, this highlights the legal and practical risks of using language that may inadvertently signal age bias, potentially excluding qualified older candidates and violating age discrimination laws. Employers can audit and revise job postings to ensure they are age‑neutral, particularly in references to traits like adaptability, energy, or tech-savviness. From a policy standpoint, these findings support stronger regulatory oversight by governments or equality bodies. This could include clearer guidance on how to advertise in an age‑neutral way and broader educational campaigns to counteract workplace age stereotypes.

Self-directed ageism can be as equally harmful as institutional and interpersonal ageism, and occurs when individuals internalise societal ageist attitudes, modifying their own beliefs and behaviours in ways that reinforce negative stereotypes about ageing. This can arise from repeated exposure to cultural narratives that portray ageing as synonymous with decline, reduced productivity, and diminished cognitive ability. Research suggests that older individuals may unconsciously adopt these views, leading them to underestimate their capabilities, withdraw from opportunities for career advancement, and disengage from training or development programmes (Centre for Ageing Better, 2023[87]; Vickerstaff and van der Horst, 2022[88]).

The consequences of age discrimination are multifaceted. For individuals, it can result in prolonged unemployment, underemployment, and financial insecurity during what should be their peak earning years. Older workers who internalise negative stereotypes may experience decreased self-confidence, heightened stress, and reluctance to seek employment or professional growth. This can lead to premature workforce exits, reinforcing the economic and social challenges associated with ageing populations. Further, self-directed ageism has been linked to negative health behaviours, such as avoiding preventive healthcare or exercise, which in turn contribute to poorer health outcomes and increased reliance on social care (Centre for Ageing Better, 2023[87]). For businesses, excluding experienced workers results in a loss of valuable skills and knowledge, potentially decreasing overall productivity.

Figure 3.14. Mid-to-late career workers report widespread experience of age discrimination
Copy link to Figure 3.14. Mid-to-late career workers report widespread experience of age discrimination

Share of workers (45+) who have experienced age discrimination in the workplace

Most OECD countries have implemented laws to prevent age discrimination in hiring, along with various initiatives aimed at shifting employer attitudes toward older workers. Evidence shows that laws protecting older workers from age and disability discrimination can reduce age discrimination in hiring (Neumark, 2020[89]). In a large‑scale field experiment, Neumark (2019[90]) found that states in the United States with more stringent age discrimination laws – particularly those allowing larger damages – tend to show reduced discrimination in hiring, as measured by callback rates for older applicants. However legal measures often fall short due to weak enforcement and the financial or procedural challenges individuals face when pursuing discrimination claims in court (OECD, 2019[5]).22

Addressing self-directed ageism requires both systemic and individual-level interventions. Employers can play a crucial role by fostering age‑inclusive workplaces that challenge stereotypes, ensuring access to training for older workers, and promoting lifelong learning (Vickerstaff and van der Horst, 2022[88]). On an individual level, raising awareness of how ageist narratives shape self-perception can help older workers reframe their understanding of their own capabilities. Broader cultural change, including shifts in media representation and public discourse around ageing, is also essential to reducing the prevalence of ageist beliefs and their damaging consequences (Henry et al., 2023[91]).

A key aspect of promoting age diversity is ensuring best practices in recruitment, retention, and retirement. Tools such as the Good Recruitment for Older Workers (GROW) toolkit developed in the United Kingdom can be used by businesses as a starting point for reducing age bias in recruitment practices (Box 3.3). Approaches such as skills-based hiring – prioritising an individual’s capabilities and competencies over formal qualifications or chronological factors like age – can also potentially help address age discrimination in the workplace. However, at this point there is no available evidence on how skills-based hiring affects discrimination. Further, some employers may still retain biases, and automated hiring tools could inadvertently discriminate against older workers if the underlying algorithms or data reflect existing biases (Butrica and Mudrazija, 2022[92]; Broecke, 2023[93]).

Box 3.3. Good Recruitment for Older Workers (GROW) Toolkit

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The GROW toolkit, developed by the Centre for Ageing Better, the CIPD (Chartered Institute of Personnel and development) and Recruitment and Employment Confederation in the United Kingdom, provides employers with practical strategies to reduce age bias in recruitment processes and create multigenerational workplaces. Strategies discussed in the toolkit include developing recruitment processes that minimise both explicit and implicit age biases. This includes debiasing job advertisements by using age inclusive language, and adopting recruitment practices such as blind applications, clear interview guidelines, and reasonable adjustments for candidates’ needs. Fostering a workplace culture that values age diversity is also recommended to raise awareness and build confidence among staff. This can be achieved by training employees to recognise and challenge age‑related biases, and encouraging intergenerational collaboration, for example.

Source: Centre for Ageing Better (2021[94]), Good Recruitment for Older Workers (GROW) A guide for employers, https://ageing-better.org.uk/sites/default/files/2021-10/GROW-a-guide-for-employers.pdf.

3.3.3. Multigenerational workforces can boost firm productivity

A key factor influencing employers’ demand for older workers is how compensation costs and productivity evolve with age. Empirical evidence indicates that while older workers often bring extensive experience and stability to a firm, there is no consistent correlation between age and productivity. Studies using matched employer-employee data across various countries offer mixed findings. For instance, some studies show that firms with a higher share of older workers experience lower productivity, while others find no significant relationship or even slightly positive effects in specific contexts (Hellerstein and Neumark, 1995[95]; Cardoso, Guimarães and Varejão, 2011[96]; Hellerstein, Neumark and Troske, 1999[97]; Haltiwanger, Lane and Spletzer, 2007[98]; Mahlberg et al., 2013[99]; Daveri and Maliranta, 2007[100]; Göbel and Zwick, 2012[101]).23

Additionally, these studies often conflate two distinct effects: the individual productivity of workers and the complementary effects of co-workers. OECD evidence shows that workers of both younger and older age groups tend to be more productive when they work in companies with a greater number of colleagues from the other age group (Figure 3.15). Workers aged 50 and above demonstrate productivity levels comparable to those of individuals aged 35‑49, and they perform better when they work alongside more younger colleagues (OECD, 2020[102]). Organisations with a 10% higher share of workers aged 50 and over than the average are 1.1% more productive (OECD, 2020[102]). This is due to a direct effect of proportionately fewer younger workers and a positive spillover effect from a higher share of older workers. This boost stems from the complementarities between age groups, specifically that older workers have lower worker turnover, greater management experience, and greater general work experience (OECD, 2020[102]).

Figure 3.15. Employees are more productive when they work with others who are of a different age
Copy link to Figure 3.15. Employees are more productive when they work with others who are of a different age

Change in firm productivity when the number of employees aged 50 and above increases by 10%, with a corresponding decline in employees aged 35‑49, for Costa Rica, Finland, Germany, Japan and Portugal

However, irrespective of the empirical evidence, employer perceptions of the productivity of older workers are also critical from the perspective of labour demand. Results from a recent OECD/Generation survey (OECD/Generation: You Employed, Inc., 2023[103]) find that while employer perceptions of the strengths of job candidates vary significantly by age (Figure 3.16, Panel A).24 the actual job performance of mid-to-late career workers hired in entry or intermediate level jobs (following a change in occupation) is seen as at least as good or better compared to younger hires (Figure 3.16, Panel B).

Figure 3.16. Employers expect younger workers to be a better fit when hiring than older workers
Copy link to Figure 3.16. Employers expect younger workers to be a better fit when hiring than older workers

3.3.4. Aligning wages with performance, not age

Aligning wages more closely with productivity rather than age or seniority in collective bargaining agreements could increase demand for older workers and reduce ageism in hiring. In many OECD countries, seniority-based pay structures result in wage profiles that rise steeply with age and tenure regardless of actual productivity. This wage‑productivity mismatch often discourages employers from retaining or hiring older workers. Evidence from countries such as Germany illustrates that moving away from automatic seniority pay has contributed to improving employment outcomes for older workers. German firms increasingly adopt performance‑related or task-based pay scales, which better reflect the actual contributions of workers rather than their length of service (OECD, 2019[5]).

Conversely, in Japan and Korea, seniority-based systems remain deeply embedded in labour market practices. This is reflected in both countries’ persistent challenges with older worker retention. In Japan, although legislative measures have extended the mandatory retirement age, many firms continue to rehire older workers at substantially reduced wages, reflecting their diminished bargaining position rather than their productivity (OECD, 2018[104]). Korea faces similar issues, with older workers disproportionately pushed into low-quality or non-regular employment despite high participation rates. Here, steep age‑related wage premiums contribute to early separations from regular employment, creating financial insecurity and exacerbating old-age poverty risks (OECD, 2018[105]).

Replacing seniority-based wage systems with productivity-aligned remuneration frameworks is a critical step toward the goal of continued labour force participation. Performance‑related pay, unlike seniority-based pay, ties financial rewards directly to an individual’s performance, often using measurable targets or assessments. However, to be effective, performance‑related pay must be designed with care. Evidence suggests that both financial incentives and non-financial recognition can significantly improve motivation and performance, but only when they are perceived as fair, linked to clear standards, and embedded within supportive management (Cotton, 2022[106]).

3.4. Promoting the employability of workers throughout their working lives

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Promoting employability throughout life is essential for improving job opportunities for mid-to-late career workers. While some mid-to-late career workers thrive in the labour market, others face challenges due to outdated or insufficient skills, lack of experience in job search or poor health. To support longer careers, mid-to-late career workers need opportunities to develop relevant skills and work in environments that promote well-being, health, and productivity. Policies to improve the skills and training of mid-to-late career workers are discussed further in Chapter 4.

3.4.1. Supporting employers in introducing age management practices in the workplace

As workforces age and become more multigenerational, employers need support to implement effective age management practices. Adopting a comprehensive approach that covers work organisation, training, health, and working time can help workers remain in employment and sustain or improve their productivity. Many companies, particularly SMEs require support and consultation in the development of age management practices in the workplace. Investing in effective firm management is essential, as without it, efforts to enhance hiring practices, training, or workplace health policies will likely fall short. Quality management practices, such as continuous improvement, monitoring key performance indicators, and focusing on employee development, can significantly boost firm productivity, raise wages, and reduce quit rates (Hoffman and Tadelis, 2021[107]; Friebel, Heinz and Zubanov, 2021[108]; Moscelli, Sayli and Mello, 2022[109]). However, smaller businesses often lack the formal management systems common in larger firms, potentially limiting their capacity to grow and compete. In some countries the PES is supporting companies to improve age management practices (Box 3.4).

For employers, implementing and maintaining high-performance work practices (HPWPs) can be an effective HR strategy to retain older workers and delay retirement (Stirpe, Trullen and Bonache, 2018[110]; Jiang et al., 2022[111]). HPWPs – comprising skill-, motivation-, and participation-enhancing practices – help meet older workers’ needs for autonomy, purpose, and respect, encouraging them to stay longer in the workforce. Jiang et al. (2022[111]) found that in the United States, high-involvement work practices are associated with lower retirement intentions, particularly when they align with older workers’ intrinsic motivations and work values. Analysis by Stirpe et al. (2018[110]) using data from the United Kingdom note that while the retention benefits of HPWPs may diminish somewhat with age due to increased sensitivity to job demands, age‑aware design of such practices can still support engagement and reduce early retirement. Evidence shows that organisations should aim for integrated and age‑inclusive HR strategies that balance the needs of all age groups and foster an inclusive culture (Boehm, Schröder and Bal, 2021[112]).

Box 3.4. Supporting age management in firms in Austria

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Impulse consulting for companies helps employers in strategic personnel management

Since 2015 the Austrian Public Employment Service offers free consulting to Austrian companies of all sizes (OECD, 2025[78]). The aim of the “Impulse Consulting for Companies” (Impulsberatung für Betriebe) programme is to assist companies with challenges related to personnel management. Impulse consulting for companies in the area of age(ing)-appropriate workplaces can focus on age‑specific hiring practices, redesign of jobs and workplaces, working time policies, intergenerational knowledge transfer, health management practices and training measures. Evaluation of the programme found that the consulting service is associated with changes in HR practices in participating companies. Relative to a control group, these companies were relatively more likely to hire low-qualified workers, women, and workers over the age of 45, with the share of companies hiring older workers being 5 percentage points higher than in the control group.

Demographic consulting to create an age‑appropriate digital work environment

Demographic consulting Digi+ (Demografieberatung Digi+) is a free consulting service for the creation of age‑diverse and digitalised workplaces in Austria. Companies can benefit from comprehensive advice along five key areas (work design, leadership and culture, personnel management, knowledge and skills, health) to create an age‑appropriate digital work environment.

3.4.2. Employee‑oriented flexible working conditions help workers stay in employment

Older workers show a strong preference for jobs with greater flexibility in work schedules and less burdensome work. Ameriks et al. (2020[46]) found that about 60% of non-working respondents, mostly in their late 60s or 70s, would be willing to return to work if offered a flexible schedule. This preference for flexibility is consistent with actual labour market transitions, as shifts to part-time, self-employment, temporary jobs or bridge jobs (jobs taken after retirement from a career job) are common as people age (Abraham, Hershbein and Houseman, 2021[49]). Offering a range of options, such as reduced hours, job sharing, remote work, or consulting opportunities, allows employees to tailor their transition according to their financial and personal circumstances. Employers should establish clear policies on eligibility criteria and workload expectations to avoid confusion and ensure consistency across the organisation.

Overall, evidence suggests that flexibility can have a positive effect on work-life balance, job satisfaction and productivity for older workers. Flexible work arrangements can enhance productivity in two ways: by attracting more productive workers and by incentivising workers to exert more effort or time. A recent field experiment found that offering a full-time flexible contract rather than a full-time non-flexible one can increase a worker’s overall productivity by nearly 50%, with about 40% of this effect attributed to attracting more productive workers (Boltz et al., 2020[113]).25

Employee‑oriented flexible working arrangements can be supported by governments, employers and social partners. Recent reforms in the United Kingdom have led to the introduction of the right to request flexible working from the first day of employment, rather than after 26 weeks of continuous employment, where flexible working can cover options such as remote or hybrid work, job sharing, compressed hours, staggered hours and part-time work.

3.4.3. Greater policy effort is needed to support women’s employment

Motherhood has a substantial negative impact on women’s career prospects, affecting both their earnings and opportunities for advancement throughout the rest of their life, thereby affecting their job prospects in later life – a phenomenon widely known as the “motherhood penalty” (Healy and Heissel, 2020[114]; Kleven et al., 2019[115]; Barth, Kerr and Olivetti, 2021[116]; Goldin, Kerr and Olivetti, 2022[117]). This penalty stems from a combination of direct employer discrimination and indirect effects such as reduced working hours or career interruptions due to childcare responsibilities, which are particularly common among women with low to medium skill levels, partly because the financial cost of leaving work is lower (OECD, 2021[118]).

The negative effects of motherhood on employment and earnings are often compounded later in life by the demands of informal caregiving for ageing parents or partners – a role taken on by 13% of people aged 50 and above in OECD countries, of whom 62% are women group (OECD, 2021[119]). Informal caregiving is associated with lower employment rates and earnings, particularly for women and older workers (Maestas, Messel and Truskinovsky, 2024[10]), and many caregivers continue to face employment challenges and reduced earnings even after their caregiving duties end (Vangen, 2021[120]).

Efforts to increase labour force participation, particularly among women, must carefully consider the trade‑offs between paid employment and unpaid care work. While integrating more women into the workforce is crucial, it often leads to a reallocation of time from essential, yet unpaid, caregiving responsibilities to paid labour – see Chapter 2. This shift can have unintended consequences, especially if care work remains undervalued in economic terms.

To address these disparities, workplace reforms that promote flexibility, such as job-sharing and predictable scheduling, can help balance professional obligations with caregiving duties. The high cost of childcare and long-term care in many countries can prevent women from re‑entering the labour force or lead women to leave current positions in search of more flexible working arrangements. More generous support for childcare, such as public provision or subsidies plays a key role in supporting female labour force participation (Canaan et al., 2022[121]; Farré and González, 2019[122]; Albanesi, Olivetti and Petrongolo, 2022[123]).26

Evidence suggests that greater parental leave sharing can improve family well-being and female employment outcomes. Although fathers’ uptake of leave remains low across OECD countries, paternity leave has significant benefits: it helps mothers return to work without reducing fathers’ labour market participation (Farré and González, 2019[122]; Rønsen and Kitterød, 2014[124]). Fathers who take leave are also more likely to engage in childcare and household duties, strengthening family dynamics and challenging traditional gender roles work (Korsgren and van Lent, 2022[125]). Reflecting these benefits, many OECD countries have introduced reforms to promote fathers’ leave. While only seven countries offered paternity leave in 1995, by 2020 this had increased to 34 (OECD, 2022[126]). Countries such as Estonia, Greece and Canada provide specific entitlements or incentives for fathers, and others, including Norway and Iceland, have introduced individual non-transferable leave to encourage equal sharing.

3.4.4. Job and career mobility can play a key role in supporting employment at older ages

However, not all jobs remain a good fit as people age. For workers facing health challenges, limited advancement opportunities, or poor job quality, mobility can provide a pathway to more suitable and sustainable employment. Voluntary job changes later in life are associated with improved job satisfaction, flexibility, and, in some cases, higher wages. However, job mobility declines significantly with age, with only 6% of workers aged 45‑64 changing jobs annually, compared to 17% of younger workers (OECD, 2024[69]). Yet, without targeted policies, many older workers remain trapped in low-quality jobs, with 60% of low-skilled workers aged 45‑64 who change jobs moving into another low-skilled position, limiting their career progression and wage growth (OECD, 2024[69]).

Governments and employers have a role to play in facilitating career transitions for older workers. Effective policies include targeted career counselling and retraining programmes, such as Australia’s Career Transition Assistance Program, which supports people 45 years and over to build their job search and digital literacy, identify existing transferable skills and develop a plan to change careers. Employer-led initiatives, such as mid-career reviews, have also proven effective in helping workers reflect on their career options and plan for later-life transitions. These policies collectively lower barriers to mobility, enabling older workers to remain in the workforce for longer while ensuring their jobs align with their skills and aspirations – see also Chapter 4.

3.4.5. Early interventions are crucial to prevent workers with disabilities from exiting the labour market

As life expectancy has increased in recent decades, many individuals now enjoy longer periods of good health, nevertheless with advancing chronological age, the likelihood of experiencing health issues rises. Older adults are more susceptible to chronic conditions such as heart disease, diabetes, and arthritis, which can impact their quality of life and ability to continue in their current work roles. Implementing early support measures can help workers with disabilities stay employed. Notably, certain demographics, including women and those with limited education, experience higher rates of disability. While social protection is essential for assisting older workers with health problems, it may inadvertently discourage continued employment and self-reliance. Extended periods away from work can lead to skill deterioration and increased detachment from the labour market. Therefore, interventions should focus on early support strategies that facilitate rehabilitation and a gradual return to work.

Labour force survey data provide insights into the main reason why people left their last job for those who are currently unemployed.27 Among workers aged 55‑64 in OECD countries for which there is available data, 47% of people who were no longer in employment left their last job to retire (on average), while a further 17% left due to illness or disability (Figure 3.17). However this data needs to be treated with caution as in some countries such as Austria, France and Slovenia people retiring on disability benefit are likely to classify themselves as retired, not as disabled. Among those aged 45‑54, 22% cited illness as the main reason for leaving their last job. In Denmark, Belgium and Norway more than 40% cite illness as the main reason (Annex Figure 3.A.14).

Figure 3.17. Retirement, illness and job dismissal are the main reason jobless older workers left their job
Copy link to Figure 3.17. Retirement, illness and job dismissal are the main reason jobless older workers left their job

Share of people not in employment having left their last job during the previous 8 years, average of selected European OECD countries, average of 2018‑23

Effective return-to-work programmes can enhance employability for workers requiring additional assistance in finding suitable job matches (OECD, 2023[127]). These programmes may address health-related barriers through regular consultations with caseworkers and employees, medical rehabilitation (e.g. psychological counselling, health management courses), or work-related obstacles via traditional labour market activation policies (e.g. career counselling, training programmes, work experience). Although younger workers are more likely to engage in these vocational programmes, older participants have comparable success rates in returning to work (OECD, 2023[127]). Additional early intervention methods include involving employers in monitoring processes, graded return to work, and allowing partial sickness benefits for part-time work (Box 3.5).

Ongoing support during the transition back to work is also crucial to prevent workers from facing deteriorating conditions that may lead to premature labour market exit. Investing in successful transitions is essential; without continuous support, workers may develop new disabilities that force them out of the labour market, negating the economic benefits of initial interventions. Incorporating continuous monitoring and support services, such as those provided by Australia’s Disability Employment Services programme, can help prevent the worsening or emergence of new health issues (OECD, 2024[69]).28

Box 3.5. Early intervention health programmes

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Capacity-oriented sickness certificates in the Netherlands

In the Netherlands, employers and employees are obliged and have strong incentives to follow a defined return-to-work track with fixed milestones and dates (OECD, 2023[127]). Within six weeks of sickness, employees need to see a social insurance or occupational physician for a remaining work-capacity assessment. Within eight weeks, the individual employer and employee must write an action plan how both parties can promote return to work. This includes the obligation to examine whether a return to the previous job, or to the same company but another job, is possible and if so, under which conditions (e.g. with an adjusted workplace or schedule, or with graded work). The parties must reassess remaining work capacity every six weeks. About three‑quarters of employers have insured themselves against the risk of continued wage payments via private insurers (Kools and Koning, 2019[128]). These private insurers can facilitate return to work further. All involved actors have strong incentives to co‑operate. Employees on employer-provided sick pay (which, in the Netherlands, is paid for two years) have legal obligations to collaborate, with the risk of dismissal and losing eligibility to employer-provided sick pay and disability benefits. Employers have long and expensive employer-provided sick pay obligations that can be further extended (by yet another year) in case of non-compliance with their obligations. They also face experience‑rated disability benefit costs after employer-provided sick pay. The private insurer has a direct financial incentive to stimulate return to work to lower insurance payments.

Graded return to work in Norway

Research indicates that participation in graded work increases the probability to be in employment two years later by 16 percentage points. Furthermore, a study suggests that graded work mitigates the negative effect of sickness absence on firm profits by 70%. In Norway, employees on sick leave are required to be in work-related activity within eight weeks of sickness, unless certifying doctors can make a compelling case for a full sick leave. However, the activity requirement is not always rigorously enforced. A programme implemented in the Norwegian region of Hedmark in 2013 aimed to enforce the activity requirement more strictly. This was found to reduce working hours lost due to sickness absence by 12% in Hedmark, both because more persons with remaining work capacity started working part-time and because the average duration back to full-time work was reduced. The study also estimates that the programme reduced social security spending by USD 310 per employee per year in Hedmark, not taking into consideration any savings because of lower permanent disability benefit uptake later on.

Occupational health programmes and workplace redesign can play a key role in mitigating the effects of demanding and hazardous jobs

A significant challenge regarding workers’ health across OECD countries involves assisting older employees in moving out of demanding or hazardous jobs, which directly impacts their health, well-being, and career opportunities. Low-skilled workers in particular, are more likely to require additional support to transition to better opportunities later in their careers.

In many OECD countries, special retirement provisions exist for these workers, allowing them to retire early without penalties (OECD, 2023[50]). However, a shift toward proactive strategies to enhance working conditions and support transitions to less demanding occupations could help extend careers and improve older workers’ quality of life. These strategies might include training and career counselling programmes, professional redeployment initiatives and strengthening occupational health policies to address sickness and disability at their source (OECD, 2023[50]).

Job and workplace redesign can help organisations retain workers through modifying the tasks, responsibilities, or work environment of a role to align better with the abilities and needs of employees (Box 3.6). This is especially beneficial for older employees facing physical challenges or shifting priorities, as it allows them to contribute meaningfully while ensuring their well-being. The Work and Well-Being Initiative, a joint research effort by Harvard and MIT, has developed a toolkit to reshape workplace conditions that contribute to stress-related health problems. The toolkit is based on three core principles: increasing worker schedule control and voice, moderating job demands, and enhancing social relations at work through employer support and training (Lovejoy et al., 2021[129]; The Work and Well-Being Initiative, 2021[130]). Lack of control over work schedules can lead to stress, but greater autonomy has been linked to higher productivity and lower turnover (Kelly and Moen, 2020[131]; Moen, Kelly and Hill, 2011[132]). Addressing physical strain through regular workplace risk assessments, which account for both physical and psychosocial hazards, is another key component of stress reduction (Bevan and Cooper, 2022[133]). Lastly, workplace social relationships play a crucial role in employee well-being. Initiatives such as the Availability, Responsiveness, and Continuity (ARC) programme, tested among social services workers in child welfare and mental health programmes in the United States improved workplace climate, reduced burnout, and enhanced job satisfaction (Glisson, Dukes and Green, 2006[134]; Glisson et al., 2012[135]). These strategies collectively highlight the importance of redesigning work environments to prevent poor health outcomes and enhance overall well-being.

Box 3.6. Preventing workplace injury and job redesign

Copy link to Box 3.6. Preventing workplace injury and job redesign

Preventing occupation health-related injury in France

France offers several policies geared towards preventing and addressing the mental and physical effects of work. Taken together, the policies raise awareness of workplace ageing and enable workers to transition to safer roles.

The Professional Prevention Account (C2P) (Compte professionnel de prévention) provides workers in hazardous conditions with autonomy to make changes in their career. Workers exposed to occupational risk factors (e.g. night work, successive alternating shifts, exposure to loud sounds, etc.) acquire points that can be exchanged for work in a less exposed position, finance a professional retraining project, change to a part-time work schedule, or access early retirement.1
Created in 2023, France’s Investment Fund for the Prevention of Occupational Wear and Tear (FIPU) (Fonds d’investissement dans la prévention de l’usure professionnelle) aims to protect workers’ health by reducing exposure to three key ergonomic risk factors: manual handling of loads, awkward postures, and mechanical vibrations – which together account for over 87% of recognised occupational illnesses. The fund supports action at three levels. For employees, it facilitates access to retraining through the professional transition project, covering most training costs. For companies, it offers subsidies for ergonomic equipment, training, diagnostics, and workstation adaptations. At the sectoral level, professional branches help define at-risk occupations, guiding the fund’s targeted allocations. Industry-specific prevention bodies may also receive dedicated funding to expand awareness and preventive efforts.
The French policy on Strengthening Occupational Health Prevention (Renforçant la prévention en santé au travail) allows all workers around age 45 to meet with an occupational physician to ensure that the worker is healthy enough for their role and knows how to prevent occupational wear and tear. The occupational physician can propose job adjustments, as well as initiatives to promote lifelong learning, such as supervised trials and re‑skilling within their firm. In 2021, the law was strengthened to enable all workers returning to work after a long-term leave to test a new job within their company or another company.

Job redesign in Singapore

The Job Redesign Centre of Excellence (JRCoE) was established by Workforce Singapore in collaboration with the Institute for Human Resource Professionals (IHRP) to serve as a one‑stop centre for enterprises aiming to transform their business and workforce through job redesign (Workforce Singapore, 2024[136]). The JRCoE focuses on three strategic pillars: Thought Leadership, Capability Development, and Advocacy and Action. Enterprises which are keen to embark on job redesign can access funding support of up to SGD 30 000. The JRCoE supports enterprises by providing industry-relevant expertise and resources, such as sector-specific playbooks and capability development workshops, to facilitate the adoption of job redesign practices. Additionally, it promotes best practices across its network of HR professionals to accelerate enterprise transformation. An expert panel, comprising leaders from the Ministry of Manpower, National Trades Union Congress, Singapore National Employers Federation, academia, and industry professionals, provides strategic oversight to advance job redesign adoption in Singapore. Key initiatives of the JRCoE include advocacy campaigns to encourage greater adoption of job redesign, development of sectoral playbooks (starting with HR and retail sectors) to guide enterprises through a structured approach, and workshops to equip HR teams with the necessary knowledge and skills.

1. Since the introduction of the Professional Prevention Account (C2P), the number of retiring insured persons who have acquired at least one point during their career has been steadily increasing: it increased from 6 610 in 2016 to 21 380 in 2021 (Beaufort, 2023[147]). However, only 1 010 insured persons who left in 2021 benefited from at least one increase in the length of insurance (MDAP) generating an effective additional pension right. No information is currently available on how the points have been used for part-time work or training purposes.

Job rotation and redeployment programmes help workers, particularly those with health-related issues or those in arduous occupations, to identify and transition into roles that better align with their skills and aspirations. Redeployment schemes help prevent occupational health issues by reallocating workers within a firm, demonstrating employer support and fostering intergenerational exchange. However, employers sometimes misuse these schemes to address skills shortages rather than prioritising workers’ needs (Lain, Vickerstaff and van der Horst, 2022[137]). To be effective, redeployment should enhance employability, flexibility, and health, preventing workers from feeling downgraded (Naegele and Walker, 2006[138]). These schemes work best when paired with retraining and upskilling. While employer-led programmes are ideal, government initiatives like Luxembourg’s Professional Redeployment Programme (Reclassement Professionnel) supports eligible workers to reintegrate into a role that is adapted to their health and flexibility needs within the same company, or potentially another company (OECD, 2024[69]).

3.5. Concluding remarks

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Supporting longer working lives requires a comprehensive approach that reflects the profound demographic, economic and technological transformations reshaping labour markets. The last couple of decades have seen a remarkable increase in the employment of older workers and as life expectancy increases and people remain healthy in later life, the potential to extend working lives continues to grow.

Pension reforms such as raising retirement ages or restricting early exit pathways have contributed significantly to raising the average age of labour market exit, yet these efforts must be embedded within a broader policy framework that actively enables older people to remain in, or re‑enter, the workforce. This includes supporting employers to implement age‑inclusive practices – from fair recruitment and retention strategies to inclusive talent management – and fostering workplace environments that promote productivity across all age groups.

Crucially, promoting longer working lives must go hand-in-hand with efforts to tackle persistent inequalities. Significant disparities in employment outcomes by gender, education level, and health status continue to undermine inclusive labour market participation. Addressing these gaps requires tailored interventions that ensure older workers – especially those with lower educational attainment, chronic health conditions, or caregiving responsibilities – have real opportunities to stay active in the labour market.

Moreover, adapting to a fast-evolving world of work is essential. Advances in digital technology and AI are reshaping skill demands, often disadvantaging older workers in manual or routine jobs. Simultaneously, the green transition is generating new employment opportunities that demand updated or entirely new skills. Lifelong learning must become a central pillar of employment policy, with access to upskilling and reskilling opportunities available throughout the life course. Special attention should also be given to employee‑oriented flexible work options and healthy working conditions, which are vital for sustaining employability over time.

A life‑course perspective is essential. Evidence shows that steady employment during one’s 50s is a strong predictor of continued labour market participation into one’s 60s. Early and sustained investment in health, skills, and career development – including through occupational health programmes, flexible retirement schemes, and inclusive parental leave policies – can help prevent premature labour market exits and improve long-term employment prospects.

In sum, preparing for an ageing workforce is not just about delaying retirement – it is about reimagining the entire working life. Only by integrating structural reforms with targeted support, inclusive employment practices, and future‑oriented workforce policies can OECD countries ensure that longer working lives are not only achievable but also fair, productive, and fulfilling for all.

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Annex 3.A. Additional charts

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Annex Figure 3.A.1. Employment rates are rising among older adults across birth cohorts
Copy link to Annex Figure 3.A.1. Employment rates are rising among older adults across birth cohorts

Employment rates by birth cohort and gender

Annex Figure 3.A.2. Employment rates have risen for mid-to-late career workers across most OECD countries
Copy link to Annex Figure 3.A.2. Employment rates have risen for mid-to-late career workers across most OECD countries

Percentage point change in employment rates by age, 2000‑24, OECD countries

Annex Figure 3.A.3. Employment rates have risen irrespective of educational attainment in most OECD countries
Copy link to Annex Figure 3.A.3. Employment rates have risen irrespective of educational attainment in most OECD countries

Percentage point change in employment rates by gender and educational attainment, ages 55‑64, 2000‑23

Annex Figure 3.A.4. Employment rates are highly correlated with education at age 65‑69
Copy link to Annex Figure 3.A.4. Employment rates are highly correlated with education at age 65‑69

Employment rates among workers aged 65‑69 by level of education

Annex Figure 3.A.5. The incidence of unemployment and long-term unemployment by age, 2024
Copy link to Annex Figure 3.A.5. The incidence of unemployment and long-term unemployment by age, 2024

Annex Figure 3.A.6. Rates of inactivity remain substantial across OECD countries at older ages
Copy link to Annex Figure 3.A.6. Rates of inactivity remain substantial across OECD countries at older ages

Inactivity rates among workers aged 50‑54, 55‑59 and 60‑64, 2024

Annex Figure 3.A.7. Women with low education have nearly four times the inactivity rate of tertiary-educated peers
Copy link to Annex Figure 3.A.7. Women with low education have nearly four times the inactivity rate of tertiary-educated peers

Inactivity rates by gender and level of educational attainment, persons aged 55‑64, 2023

Annex Figure 3.A.8. Likelihood of working longer, by employment stability in one’s 50s and education
Copy link to Annex Figure 3.A.8. Likelihood of working longer, by employment stability in one’s 50s and education

Likelihood of working in one’s 60s by employment stability in one’s 50s and education

Annex Figure 3.A.9. There are significant differences in “age‑friendliness” of occupations
Copy link to Annex Figure 3.A.9. There are significant differences in “age‑friendliness” of occupations

Average “age‑friendliness” index (0‑100), by occupation

Annex Figure 3.A.10. Average usual hours worked have declined for full-time workers in most OECD countries
Copy link to Annex Figure 3.A.10. Average usual hours worked have declined for full-time workers in most OECD countries

Percentage change in average usual hours worked of workers aged 55‑64, average years 2001‑03 and 2021‑23 by employment status

Annex Figure 3.A.11. Low educated workers are more likely to be working part-time because they cannot find a full-time job
Copy link to Annex Figure 3.A.11. Low educated workers are more likely to be working part-time because they cannot find a full-time job

Share of part-time workers who could not find a full-time job by age and level of education, average 2018‑22

Annex Figure 3.A.12. Age of effective labour market exit varies considerably across OECD countries
Copy link to Annex Figure 3.A.12. Age of effective labour market exit varies considerably across OECD countries

Effective labour market exit age by gender, 2022

Annex Figure 3.A.13. High hiring rates can reflect low rates of employee retention
Copy link to Annex Figure 3.A.13. High hiring rates can reflect low rates of employee retention

Annex Figure 3.A.14. Illness is a major reason for jobless older workers leaving a job
Copy link to Annex Figure 3.A.14. Illness is a major reason for jobless older workers leaving a job

Voluntary separations (by reason) from last job or business as a percentage of total voluntary separations, average of 2019‑23

Notes

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← 1. In contrast lower-educated older workers, particularly in routine or manual occupations, face a higher risk of displacement due to automation, as they have fewer opportunities to transition into AI-enhanced roles (Lane, 2024[2]). Moreover, older workers generally have lower access to AI-related upskilling opportunities, which further exacerbates skill mismatches and reduces their employment prospects in an AI-driven workforce.

← 2. Across all age groups the variation in employment rates has fallen (for example at age 45‑54 the standard deviation in employment rates fell from 8.2% in 2000 to 6%, and from 13.7% to 8.1% at age 55‑59).

← 3. The standard deviation in employment rates at age 60‑64 in 2023 was 13.5%, more than double that at age 45‑54.

← 4. The absolute gap in educational attainment between 25‑34 year‑olds and 55‑64 year‑olds with below upper secondary narrowed from 26.7 percentage points in 2000 to 12.6 percentage points in 2023 (OECD, 2024[8]). The gap fell from 16.9 percentage points in 2000 to 4.4 percentage points in 2023 for those with upper secondary or post-secondary non-tertiary education. For those with tertiary education the gap increased from 10.8 percentage points to 17.1 percentage points.

← 5. Minimum years of pension contributions can also mechanically explain why more educated people work until later in their life.

← 6. Low intermittent refers to being in employment between 1‑49% of the time during your 50s. High intermittent refers to being employed between 50‑99% of the time during your 50s.

← 7. For Korea the overall decline in hours for workers aged 15‑64 between 2001‑03 and 2021‑23 was 18.3% for women and 17.7% for men.

← 8. Where retirement ages differ across schemes the maximum across schemes thus defines the NRA of the country.

← 9. This includes Korea, Colombia, Canada, Ireland, Japan, Luxembourg, Switzerland, Belgium, Germany, France, Israel, Italy, the Netherlands, Finland, Spain, Sweden, Norway and Portugal (OECD, forthcoming[51]).

← 10. Results from recent OECD cross-country analysis reveal that raising the normal retirement age increases older-age employment, but the effects differ substantially across countries depending on institutional and demographic factors. Incorporating features such as the demographic composition, the distinction between normal and minimum retirement ages, the role of private pensions, and the existence of early exit pathways allows for a more accurate reflection of country-specific dynamics (Morgavi, 2024[146]). Morgavi (2024[146]) finds larger and more heterogeneous employment effects than in earlier pooled estimates, with cross-country model predictions closer to those of single‑country microdata studies discussed above.

← 11. In an analysis of the large concentration of retirement behaviour around statutory retirement ages in Germany, Seibold (2021[64]) shows that policies relying solely on financial incentives to encourage later retirement are less effective and more costly. Similarly in Finland, Gruber et al. (2022[65]) found that relabelling of retirement ages in 2005 led to a huge increase in retirements, with cohorts subject to the change being 680% more likely to retire compared to those not affected. This followed a reform that raised the ERA from 60 to 62, and relabelled the NRA from 65 to 63, making 63 the new focal point for retirement. This effect was much larger than the impact of financial incentives such as changes in pension wealth or accrual rates, indicating that the labelling of retirement ages strongly influences retirement decisions.

← 12. The State Pension Age change for women increased the employment rate of 60‑63 year‑old women by 11 percentage points over the period between 2010 and 2017. Banks et al., (2025[68]) exploit the fact that due to the policy changes, women born only months apart experienced differing pension ages.

← 13. Rabaté et al. (2024[52]) use a regression discontinuity design to estimate the causal effects of increasing the Statutory Retirement Age in the Netherlands. They identify the mechanical and behavioural effects by comparing the observed treatment effects of the SRA reform to predictions from a simple mechanical model. The results show that the mechanical model predicts the treatment effects very well, confirming that almost all the increased participation in DI and UI is due to mechanical effects rather than behavioural changes.

← 14. Rabaté et al. (2024[52]) also consider the fiscal implications of the reform and find government savings on first-pillar pensions: EUR 874 per person per month, increased tax revenue from continued employment of EUR 307 per person per month, and additional costs from increased DI and UI claims of EUR 432 per person per month. This results in a net fiscal gain for the Government of EUR 550 per person per month, translating to EUR 66 million per month for a full cohort.

← 15. These results are consistent with other studies of pension reforms. Estimates from the United Kingdom showed that raising the ERA delayed retirement but did not lead to an unexpected surge in DI or UI claims (Cribb, Emmerson and Tetlow, 2016[142]). In evaluating pension reforms in 2010 in France which raised the statutory retirement age (SEA) from 60 to 62, Rabaté and Rochut (2020[143]) show that while the reform significantly increased employment rates among older workers, it also led to a rise in unemployment and disability claims. Specifically, while 40% of those who could no longer retire at 60 remained in employment for an additional year, the majority of the remainder shifted to unemployment, sickness or disability benefits. This shows that the reform was highly effective for those still employed at age 60 but had limited impact on those already out of the labour force. Further, Rabaté and Rochut (2020[143]) show that the employment effects were concentrated among individuals who were still employed when reaching the SEA, and that the substitution effects were driven by individuals already out of the labour force, rather than by direct substitution from work to alternative schemes. About 85% of those who would have retired instead continued working for an additional year, while among individuals unemployed at 59, 87% remained in unemployment rather than transitioning to retirement. Similarly, among those who were receiving disability insurance, 96% continued to receive disability insurance. They also find evidence of substitution from non-work status to employment, with 29% of those on sickness leave returning to work instead of retiring.

← 16. The effect of increasing flexibility on when people can enter retirement on total labour supply is theoretically ambiguous, being the result of both changes in the extensive margin (labour force participation) and the intensive margin (average hours worked). On one hand it can encourage people to stay in the workforce who might otherwise leave early through retirement or unemployment. On the other hand, it can also lead to a decline in labour supply if full-time employees, who would have continued working until the standard retirement age, choose partial retirement instead, thereby cutting their working hours. The evidence on which effect prevails is mixed, and estimating the causal effect of flexible or partial retirement reforms on longer working lives is challenging. First, it is difficult to establish a counterfactual – what would have happened to workers had they not participated in a partial retirement scheme. Many studies rely on self-reported intentions or retrospective surveys, which may not accurately reflect actual behaviour. Second, selection bias is a concern, as workers who opt for partial retirement may differ systematically from those who do not, in terms of health status, job characteristics, or financial stability. This makes it challenging to isolate a scheme’s effect from other confounding factors. Third, differences in the design of partial retirement schemes across countries and time periods make cross-country comparisons difficult, as effects can vary significantly depending on the presence of early exit incentives and labour market conditions.

← 17. A study of nine OECD countries found that phased retirement results in a slight increase in labour force participation and a decline in the number of hours worked, leading to no significant overall boost in labour supply (Börsch-Supan et al., 2018[144]). However, this study relies on aggregate country-level data rather than individual-level data, which limits its ability to account for heterogeneity in responses to flexible retirement reforms. For instance, the effects may vary by income level, education, occupation, or health status, but these distinctions cannot be fully explored in the analysis.

← 18. Haan and Tolan (2019[74]) found that when the entry age into partial retirement is set equal to the ERA (age 63) the average retirement age increases by about 4.4 months, and the average employment exit age increases by about 6.5 months compared to a scenario without partial retirement.

← 19. For example in Greece, up until 2024 if a pensioner wanted to work, 30% of the pension was withheld. Since 2024 pensioners who want to work do not see any reduction in their pension and they pay a 10% levy on any income earned.

← 20. A blocked time model is essentially subsidised early retirement. In Austria there are two types of subsidised part-time work for older employees: the continuous model and the block model (OECD, 2025[78]). The continuous model allows for part-time work over a period of up to five years. In contrast, the block model consists of a phase of full-time work for up to 2.5 years, followed by a phase of complete leave from work for the same duration. Public subsidies for these arrangements – provided by the Public Employment Service to employers – cover at least 90% of the costs for the continuous model and 35% (as of 2025) for the block model.

← 21. For workers aged 50‑54 there has been a modest increase from 10.9% to 11.1% (between average of 1997‑99 and average of 2020‑22). Among those aged 55‑59 there has been a decline from 10.5% to 9.7%, and a more substantial decline from 11.4% to 9.7% for those aged 60‑64.

← 22. Hiring discrimination is particularly difficult to demonstrate and challenge if the burden is left to the victim.

← 23. Hellerstein and Neumark (1995[95]) finds that plants with a higher proportion of older workers tend to achieve greater output or productivity in Israel. Similarly in Portugal, Cardoso, Guimarães and Varejão (2011[96]) finds that older workers’ contribution to firm productivity exceeds their wage costs. In contrast, two studies conducted in the United States report the opposite effect, showing lower output or productivity in plants where a significant share of workers are aged 55 and above (Hellerstein and Neumark, 1995[95]; Haltiwanger, Lane and Spletzer, 2007[98]). Meanwhile, research from Austria, Finland, and Germany indicates no discernible relationship between workforce age and productivity (Mahlberg et al., 2013[99]; Daveri and Maliranta, 2007[100]; Göbel and Zwick, 2012[101]).

← 24. This is consistent with other surveys that have found employers generally view older workers as equally or more productive than younger ones (Munnell and Wettstein, 2020[145]). Whether the findings reflect genuine responses or are influenced by a desire to appear politically correct is debateable. However, Munnell and Wettstein (2020[145]) also find responses to questions regarding productivity, costs, and attractiveness are consistent, lending credibility to the results. Over half of employers see no significant productivity differences between older and younger workers, while those with a preference overwhelmingly favour older workers, particularly in professional roles, where 45% view them as more productive compared to only 1% who see them as less productive (Munnell and Wettstein, 2020[145]). In contrast other surveys present a different picture. In a survey of 10 000 companies conducted by Bersin and Chamorro-Premuzic (2019[139]), over two‑thirds of respondents indicated that they viewed age as a disadvantage rather than a competitive advantage.

← 25. However, flexible work arrangements may have downsides. Working from home, for instance, may reduce chances of promotion due to less on-the‑job training and face time in the office (He, Neumark and Weng, 2021[140]). Additionally, flexible work schedules may sometimes entail requirements to work longer or at irregular hours. Despite these potential drawbacks, a field experiment conducted on a Chinese job board found that application rates are higher for flexible jobs, conditional on the salary offered, providing evidence that workers value job flexibility (He, Neumark and Weng, 2021[140]).

← 26. However, extended leave does not necessarily help women attain higher positions or narrow gaps in pay and working hours (Corekcioglu, Francesconi and Kunze, 2020[141]). Overly long maternity leave can negatively affect women’s health and hinder career progression (Canaan et al., 2022[121]; Healy and Heissel, 2020[114]).

← 27. The reasons why people leave a job to go to another job are not available in this data.

← 28. In Australia, the Disability Employment Services programme helps workers struggling to maintain their jobs due to injury, disability, or health conditions by connecting them with specialised providers. These providers offer individualised support, including workplace assessments, job modifications, and on-the‑job assistance to help manage the impact of disabilities. Initial support lasts for 26 weeks, after which ongoing assistance may be recommended, with around 90% of employees continuing to benefit from long-term workplace support.

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