New statistical data confirms that Germany possesses the oldest working-age population in the EU. One in four employed citizens is over the age of 55, signaling their imminent retirement. Meanwhile, the negative trend of early retirement persists.
Germany has become a “Methuselah” among European Union nations. While populations are aging across the entire continent, the birth rate in the Federal Republic dropped earlier than in other member states. According to the Federal Statistical Office (Statistisches Bundesamt), Germany now has the oldest working population among all 27 countries in the bloc.
One-fourth of local employees are between the ages of 55 and 64 and are rapidly approaching the end of their professional careers. In Luxembourg, the equivalent figure represents only one-eighth of the total workforce. In Poland, Austria, and France, the proportion of age groups nearing the retirement threshold is also significantly lower.
Demographic changes are increasingly becoming a competitive disadvantage for the already weakened German economy. Staff shortages are already visible across various industries nationwide. Because there will be far fewer school graduates in the future than elderly people leaving the labor market, the skilled labor deficit risks becoming the primary obstacle to economic growth in the coming years.
Policy Shifts and the “Retirement at 63” Effect
The gradual introduction of the so-called retirement at 67, a decision made two decades ago, was intended to mitigate this predictable shrinking of the labor pool. Other EU countries, such as Sweden or Denmark, have gone significantly further by linking the retirement age to increasing life expectancy.
In 2014, however, Germany effectively chose a different path in pension policy. The coalition led by Angela Merkel introduced the option to retire at age 63 without pension deductions. The impact of this measure was substantial. Since then, more than two million—predominantly highly skilled—specialists have left the labor market up to two years earlier than the established age limit (which currently stands at approximately 66.6 years).
The condition for this attractive path to early retirement is 45 years of contributions, which includes periods of childcare, caregiving, or unemployment. Those with 34 years of contributions can still retire at 63, though deductions apply. However, these deductions are set at levels considered too low to act as a deterrent. Because the state so generously encourages early retirement, it is unsurprising that the majority of new retirees stop working prematurely—with or without deductions.
This represents not only a serious loss for the economy, as the experience and accumulated knowledge of departing employees leave massive gaps in companies, but it also exacerbates the imbalance in the social security system. A growing number of retirees causes a sharp rise in expenditures while simultaneously reducing incoming revenue.
Social Policy Lacking Future Vision
Despite a severe economic crisis, the federal government refuses to restrict the practice of early retirement. Statistical data clearly illustrates the consequences: until 2014, the average age of new retirees was continuously and noticeably increasing. Since then, however, it has stagnated with slight fluctuations at just over 64 years—and this is occurring in the EU country with the oldest population.
Since the beginning of the year, the so-called active pension has been introduced to encourage voluntary continued employment. Employees who remain in their profession after reaching the official retirement threshold are provided with tax incentives. However, the effectiveness of this incentive is questionable given the constantly rising social security contributions. Meanwhile, early retirement and severance programs at crisis-stricken companies continue at full speed.
Source: Statistisches Bundesamt
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