GERMANY - Germany faces labour shortages and declines in public finance if workers continue retiring early, an Organisation for Economic Co-operation and Development (OECD) report has argued.
The government must raise the retirement age sooner than 2008 and put in place various other strategies to avoid a severe problem in the future, the OECD said.
According to the survey, many older Germans stop working well before reaching the statutory retirement age of 65, with only 40% of people aged between 55 and 64 remaining in employment.
This was well below the ratio in most other OECD countries, with three out of five people in this age group still active in Britain and the US and more than 70% employed in Sweden, the report found.
The report warned that Germany could face “labour shortages, slowing economic growth and worsening public finances,” if the problem was not rectified.
The problem was most severe in the former east German states, where birth rates were lower and many younger, skilled workers had emigrated to take advantage of job opportunities in western Germany.
Government had already put measures in place to encourage older workers to extend their careers, but the OECD said further measures were necessary, primarily raising the retirement age in line with rising life expectancy earlier than in 2008, as currently planned.
Incentives to retire before the official retirement age or to withdraw from the labour market by taking advantage of disability pensions or unemployment benefits, combined with exemptions from job-search requirements should be removed, the OECD said. “Early retirement schemes for the long-term unemployed should be phased out faster. Every person registered as unemployed should be required to look for a job,” the organisation stated.
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