Employability of older workers: measures for improvement

Luxembourg is generally cited as a model student by other European countries. This is particularly true in terms of its standard of living, income levels, unemployment rate, and the quality of its infrastructure. However, this is not the case in certain areas.

When it comes to the unemployment rate among older workers, Luxembourg ranks among the lowest in the OECD. This article examines the current situation of older workers in Luxembourg and highlights the incentives put in place by the government to encourage the hiring of older workers.

The worrying situation of older people in Luxembourg

One of the lowest employment rates for older workers in Europe

The employment rate for older workers in Luxembourg is particularly low, especially when compared to the OECD average. In 2021, only 44% of people aged 55 to 64 were working, compared to an average of 60.9% in the OECD. And when we compare this figure with neighboring France and Germany, the gap is 10 points and 27.7 points, respectively.

Comparison of senior employment with neighboring countries

When comparing senior employment in Luxembourg with that in Germany, the gap is even more significant. In Germany , nearly one in five people aged 65 to 69 are still working, compared to only 5.7% in Luxembourg. These figures show that Luxembourg stands out negatively, even when compared to countries with similar economic structures.

Economic sectors and senior employment in Luxembourg

Seniors are underrepresented in some of Luxembourg's main economic sectors,such as IT, finance,and engineering, where the focus is often on young talent. Conversely, they are more prevalent in sectors such as commerce,agriculture,and real estate, as well as in specialized activities such as law and research.

Why is employment among older people so low?

There are several reasons for this low employment rate among seniors:

• Cultural perception: In some sectors, older workers are perceived as less flexible or as hindering innovation, especially in technology industries.
• Skills mismatch: With the rapid evolution of technology, older workers may find it difficult to keep up to date, particularly in high value-added sectors.

Incentives for hiring older workers in Luxembourg

To remedy this situation, the Luxembourg government has introduced several incentives to encourage the hiring of older workers. These measures aim to reduce costs for employers and promote better integration of older people into the Luxembourg labor market.

Assistance for hiring "older" workers

Since 1993, assistance for hiring workers aged 45 and over has enabled employers to benefit from a reimbursement of employer social security contributions. This mechanism is one of the main levers for encouraging companies to hire experienced workers.

Reimbursement of employer contributions for hiring seniors

The duration of the reimbursement of employer contributions varies according to the age of the worker hired:

• 2 years for people aged 45 to 49.
• Until retirement for workers aged 50 and over.

These reimbursements enable companies to significantly reduce their social security contributions. This makes hiring seniors much more attractive for employers.

Why hire seniors?

In addition to financial assistance, hiring seniors has several advantages for companies:

• Experience and expertise: Older workers bring valuable know-how and can act as mentors to younger employees.
• Reliability and autonomy: In general, older workers are more autonomous and demonstrate greater consistency in their work.
• Strengthening intergenerational diversity: Older workers help to create a diverse work environment, where experience and novelty coexist, which promotes innovation.

Sectors eligible for benefits for hiring seniors

Incentives for hiring seniors are particularly relevant in sectors where experience and specific skills are valued. This includes commerce,real estate, and specialized activities such as law, research, and development.

The employability of seniors: an opportunity for the economy

Luxembourg faces significant challenges in terms of the employability of older workers. The incentives put in place by the government offer concrete solutions to encourage companies to hire older workers.

By capitalizing on the experience and skills of older workers, while reducing hiring costs, Luxembourg can turn this challenge into a real opportunity for its economy. Before they can benefit from an attractive pension system, many older workers want to be part of the active economic system.

Find out more about retirement and the pensions you are entitled to when working in Luxembourg.