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OECD countries are ageing rapidly. If no action is taken to improve the labour market situation of older workers, this could put a brake on further improvements in living standards and lead to unsustainable increases in social expenditures. Across the OECD, the median age of the population is projected to increase from 40 years today to 45 years in the mid-2050s, and the ratio of older people aged 65 and over to people of working age (15-64) is projected to rise from 1 in 4 in 2018 to 2 in 5 in 2050.

Thanks to increases in life expectancy and policy reforms across the OECD, older people (aged 55-64) are more active in the labour market than ever before. During the past decade, their labour force participation rose by 8 percentage points to reach 64% on average in the OECD in 2018. However, there is no time for complacency: progress in participation rates remains uneven, and in virtually all countries the effective age at which people exit the labour market is still lower today than it was 30 years ago, despite higher remaining years of life.

Greater efforts are required to promote the labour market inclusion of 55-64 year-olds in countries that lag behind, but also strengthening working lives beyond the age of 65, especially where participation rates of those aged 55-64 are already high. A major challenge in most OECD countries will be to narrow gender gaps in labour-market activity, which in some cases are large and persistent. Last but not least, in some emerging economies, a key challenge will be to ensure a smooth transition of young cohorts into the labour market to prevent accumulation of disadvantages that prevent or discourage working at an older age.

Reducing incentives to retire early and rewarding employment at an older age to deliver longer working lives have been at the heart of the policy agenda in many OECD countries. Statutory retirement ages have increased in many countries where the “age 67” has become the “new 65” and several OECD countries are going even further. But it is not sufficient just to improve the incentives for older people to continue working longer; they must also have better opportunities to do so. Thus, a key issue for more inclusive ageing and employment policies is to encourage employers to hire and retain older workers in better jobs.

In recent years, policy makers across the OECD have devoted greater attention to, and undertaken a number of, reforms to boost labour demand of older workers, but more can be done. Sadly, age discrimination and negative employer attitudes towards older workers continue to hinder longer working lives in all OECD countries. Further sustained and determined efforts are needed not only to better enforce anti-discriminatory legislation but also a move away from seniority-based practices for setting wages and age-based hiring and dismissal rules. In addition, all employers including those in small and medium-sized enterprises should be given guidance and greater encouragement to manage an age-diverse workforce in an efficient way that allows all workers to stay longer in employment and maintain or increase their productivity.

Promoting the employability of workers throughout their working lives – with a view to enhancing employment opportunities at an older age – is also a key requirement for longer, rewarding careers. In the context of population ageing, mobilising the potential labour force more fully and sustaining high productivity at an older age are critical. This in turn requires a healthy workforce with up-to-date skills.

However, the limited training opportunities given to older workers across OECD countries make it difficult for them to stay in their existing jobs or find a new one. Currently, on average, a third of 55-to-65 year-olds have no computer skills or experience and only one in ten were assessed as having medium to good problem-solving skills in a technology-rich environment (i.e. solving problems in a simulated internet environment). Moreover, across the OECD, older adults and the low skilled more generally participate far less in training than their younger and more skilled colleagues. Ensuring that older people maintain their employability and have access to better employment choices will help them to navigate a labour market that will increasingly involve adaptation to changes in jobs and skill requirements.

According to the OECD Job Quality Framework, the quality of working conditions is higher on average for older workers than for their younger counterparts. Nevertheless, more than one in four older workers experience job strain as measured by the difference between the demands of their jobs (such as tight deadlines) and the resources available to them to handle these demands (such as good supervision). Working conditions should be adapted to the capacities and changes in circumstances of older workers. Businesses together with policies and institutions can strengthen and better enforce safety-at-work regulations and promote well-being at work, in particular for older workers.

This report identifies what further measures could be taken to promote more and better jobs for older workers. This includes taking action in three key areas: i) rewarding work and later retirement; ii) encouraging employers to retain and hire older workers; and iii) promoting the employability of workers throughout their working lives.

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Executive summary