The European Central Bank published research concluding that population ageing has had only a limited direct drag on euro area employment in recent years because later retirement has more than offset the negative compositional effect of an older workforce. Since the first quarter of 2022, the euro area employment rate rose by 1.7 percentage points from 60.3% to about 62% in the fourth quarter of 2025. People aged 55-74 contributed 1.4 percentage points of that increase despite representing 34% of the working-age population in 2022, while the pure ageing-related compositional effect reduced the aggregate employment rate by only 0.4 percentage points. More than 90% of the increase in the employment rate among older workers came from higher labour force participation rather than from a higher share of active people being employed. Survey evidence points to fewer people moving into retirement, especially among those aged 60-65, rather than more people returning from inactivity to work. Across euro area countries, the average effective age of exiting the labour market increased by around 0.5 years between 2022 and 2024, but statutory retirement age changes explained only a limited part of that shift, with a one-year increase in the effective retirement age associated with only a 0.1-year increase in the statutory retirement age and no statistically significant relationship. The research says later retirement appears to be a structural trend that should continue to support employment growth in the coming years. It points to further scope for higher employment among older workers by comparison with Japan, where 2024 employment rates were about 74% for those aged 60-64 and 54% for those aged 65-69, compared with 53% and 19% respectively in the euro area. The pace of further increases will depend on future changes in statutory retirement ages and on health developments.
European Central Bank 2026-05-13
European Central Bank research finds later retirement drove most recent euro area employment gains while ageing cut only 0.4 percentage points
The European Central Bank published research finding that population ageing has so far had only a limited drag on euro area employment, as later retirement has offset the negative compositional effect of an older workforce. Older workers aged 55-74 accounted for most of the 1.7 percentage point rise in the employment rate since early 2022, driven by higher labour force participation and a trend towards later retirement. The research notes further scope for higher employment among older workers, while stressing that future gains will depend on statutory retirement age changes and health.