Germany: Older Workers on the Rise?

Despite of the positive employment trends the situation of older workers remains one of the major problems of the German labor market. Although there are improvements concerning older workers, whose employment ratios are approaching the figures of middle-aged people, the labor market integration of people approaching the retirement age still falls behind clearly. This is a particular problem as the German labor force is dramatically shrinking and ageing and the retirement age will increase up to 67 years in 2030. Thus it will become more and more important for the functioning of the German labor market that older workers reach the retirement age on the job and do not pass over from a (long) period of unemployment.

We show that the overall increase of the employment figures is strongly related to an increase in the stability of employment relations while transitions from unemployment to employment remain an exception. Thus the chance of leaving unemployment seems to be unevenly distributed between age groups.

We therefore shed light on the impact of individual characteristics and labor market figures on the chance to leave unemployment or the risk of staying unemployed by looking at exits from employment subject to social security contributions in 2004 and 2009 with respect to different age groups. By considering two different periods we will also be able to shed light on the possible impact if institutional changes.

A rich set of administrative microdata – the so called “Integrierte Erwerbsbiografien” (IEB) – allow us to track the employment course until the end of 2012 and provide detailed information about their labor market histories. Thus, we can identify differences in the labor market performance between age groups as well as factors increasing or decreasing the probability of re-employment, becoming long-term unemployed or leaving the labor force within age groups.