Older people need to be helped to find jobs or to remain in work to avoid a fall in living standards and economic growth as a result of population ageing, the OECD said on Monday.
Without a change in work and retirement patterns, the ratio of older, inactive persons per worker will almost double from around 38 percent in the OECD area in 2000 to just over 70 percent in 2050, the OECD said a new report.
"In Europe, this ratio could rise to almost one older inactive person for every worker over the same period," the OECD said. "Ageing on this scale would place substantial pressures on public finances and reduce growth in living standards."
Greater immigration, higher birth rates and faster productivity growth will help offset the burden of ageing on public finances but it will not be enough, it said.
The European Commission also sees population ageing as a major challenge to public finances in the European Union as taxes from a shrinking work force will not be enough to pay for a growing number of people in retirement.
Yet with EU unemployment running close to 9 percent for years, some countries see early retirement as a way to vacate jobs for younger people and bring down the jobless numbers rather than wait for economic growth to create new workplaces.
And in a sign of a how workers in some European countries oppose changes to their pension rights, unions in Belgium on Friday brought much of the country to a standstill in a general strike over government plans to raise the retirement age. The OECD said in its report that over the last 25 years the effective retirement age in the OECD had fallen substantially.
In 1970, a man could expect to spend less than 11 years on average in retirement while in 2004 the average retirement length had risen to just under 18 years. For women, the retirement length increased to 23 years from 14 years.
The OECD report said pension reform alone would not be enough to promote employment for workers above the age of 50. It was essential that older people not face a large implicit tax if they chose to continue to work past a certain age.
The report also said countries should make sure that their unemployment, disability and other welfare schemes were not used as alternative ways of leaving the labour market early.
"This is an increasingly difficult task. Indeed, as early retirement through the main pension system becomes less attractive, there is growing pressure to use these pathways instead," it said.
The report noted that employers were often reluctant to keep older workers and that legislation preventing age discrimination and information campaigns were needed, as well as abolishing the mandatory retirement age in some companies.
Also important was to keep older people's skills up to date with learning programmes, offering incentives to employers for hiring those who have already left the labour market as well as job-search assistance and help with setting up businesses.
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