Raising the retirement age will save the labor market

24.09.2024

RAISING THE RETIREMENT AGE WILL SAVE THE LABOR MARKET

People aged 60 to 69 can save the European Union's labor market in the face of a deepening demographic crisis. With the development of successful deferred retirement policies, their share in the total workforce could increase from 9% in 2023 to 14.2% in 2040. In this way, EU companies have a chance to catch up to 75% of the projected shortfall of labor, claims the latest report from the global leader in trade credit insurance Allianz Trade (formerly Euler Hermes). The research comes out on the eve of International Age Diversity Day, which is celebrated on September 24.

According to statistics, with the increased retirement age in Bulgaria, the level of engagement of people over 60 in the labor market is higher than the average for the European Union. In 2023, over 60% of people between the ages of 60 and 64 in our country continue to work, which ranks us 11th out of the 27 member states. In this age group, the level of engagement in the labor market is highest in Sweden - over 73% compared to an average of 53% for the EU. The lowest is in Luxembourg – only 23%.

In our country, the level of workers between the ages of 64 and 69 is also relatively high, with nearly a fifth of them continuing to work. For comparison, in Romania their share is only 5%. In Estonia, however, it already reaches 38%.

Apart from keeping people on the labor market until an older age, a solution can also be sought in attracting migrants. According to this indicator, however, Bulgaria continues to be in last place in the ranking for the EU, with only 0.2% of all working in our country being foreigners, compared to average levels of over 9% for the Union and reaching over 53% in the top country - Luxembourg. Bulgaria is also among the main donors of labor for Western Europe, which makes the prospects for the labor market in our country even more difficult.

In the report, Allianz Trade experts also point to a number of challenges for keeping people in the labor market until a later age. Europe can count on this saving option for its economy only if companies redouble their efforts and seriously revise their policies in this direction.

This includes reorganizing work processes, working hours and shifts, as well as investing in age-friendly workplace equipment. Part-time work, working from home, lifelong learning and tackling ageism are also important steps. Healthcare development is a key element in the overall strategy. This can help delay or avoid the onset of age-related diseases and keep the workforce healthier for longer.

Intergenerational knowledge transfer should be a priority for businesses, management styles should also become more age-inclusive. Employees must be motivated to learn and change continuously. Given the rapidly evolving technology landscape, however, training requirements will increase dramatically over the next few years, experts warn. The expected twists and turns associated with the use of generative artificial intelligence will also require great flexibility, including from older employees.

In this context, the so-called Millennials and Generation Z place a high value on opportunities for development, the acquisition of knowledge, and openness to change. Companies will therefore need to rethink their management style so that they retain young talent but can also integrate the wisdom and resourcefulness of older people in the workplace, the Allianz Trade report explains. However, experts are adamant that when generational relationships are not antagonistic but cooperative, companies with mixed teams increase the productivity of both older and younger employees.