Demographic aging has already cost advanced economies 0.10 points of wage growth and 0.13 points of productivity per year between the early 2000s and the late 2010s. This is not a projection. This is what has already occurred, quietly, while public debate focused on financial bubbles and debt crises.

The shift ahead is of an entirely different magnitude. In a quarter of OECD countries, the working-age population will decline by more than 30% by 2060. Companies will not be looking for ways to replace humans with machines. They will be looking for humans.

The Essentials

  • Demographic aging: measured cost of -0.10 points per year of wage growth and -0.13 points per year of productivity between the early 2000s and the late 2010s, according to the OECD Employment Outlook 2025.
  • A quarter of OECD countries will lose more than 30% of their working-age population by 2060.
  • Employment rate for ages 55-64 reaches 64.6% compared to 80.1% for ages 25-54: this gap represents a largely untapped reservoir of labor.
  • Bringing early departures down to the level of the top 10% of performing OECD countries would be enough to offset a significant fraction of these losses.
  • Training for seniors and mid-career mobility become productivity policies, not ancillary social measures.

The debate on AI and employment has dominated headlines for three years. Automation projections follow one another, each more spectacular than the last. In the background, an inverse problem is building silently: rich countries will run out of workers. The OECD, in its Employment Outlook 2025, diagnoses the problem with unusual precision. Aging is not a future constraint. It is an active pressure already, whose effects on growth are measurable, and whose trajectory is predictable with an unusually narrow margin of uncertainty. Today’s birth rates are tomorrow’s 2045 workers. We already know them.

Aging as a Productivity Brake, Not Merely a Social Cost

Most discussions of aging start from the budgetary angle: pensions, health, long-term care. That is legitimate. But the OECD reminds us there is a more direct and less discussed channel: aging slows the productivity of economies, independent of the question of social transfers.

The mechanism is twofold. First, an aging working population changes the composition of companies: senior workers accumulate experience, but their propensity to adopt new tools, to change methods, to train in recent technologies, statistically declines with age. The economy as a whole loses flexibility. Second, the simple decline in the number of workers reduces economies of scale and slows the diffusion of innovations, which spread faster when teams are dense and mobile.

These combined effects explain the measured cost between the early 2000s and the late 2010s: 0.10 points of wage growth per year, 0.13 points of productivity. Figures that seem modest until you multiply them by one decade, then by another. Applied to the projected trajectory, they mean that advanced economies are entering a structurally slower period, not because they lack innovation, but because they lack hands to deploy it.

This changes the frame of the debate. Automation is no longer merely a threat to employment: it becomes a partial response to a shortage. And policies to keep seniors employed cease to be equity measures and become macroeconomic levers.

A Quarter of OECD Countries Will Lose 30% of Their Working-Age Population

The projection is brutal in its precision. By 2060, in a quarter of OECD member countries, the working-age population will shrink by more than 30%. This threshold is not symbolic: it corresponds to the point beyond which marginal adjustments cease to be sufficient. You cannot offset the loss of a third of your workforce with adjustments to participation rates or marginal pension reforms. Systemic responses are required.

The countries most exposed are located in Southern and Central Europe: Greece, Portugal, Italy, Poland, Hungary. Their combination of low fertility and emigration of young people to more dynamic OECD economies creates a particularly severe demographic squeeze. Japan, often cited as an example of managing aging, figures as an involuntary precursor: what Tokyo has managed for twenty years, Warsaw and Athens will experience in the coming decade.

Japan, in fact, offers a useful laboratory. The employment rate of women and seniors has increased significantly there since 2012 as a result of deliberate policies. The result is that the country has maintained a low unemployment rate despite unfavorable demographics. The apparent paradox of a stagnant economy that does not know unemployment is explained precisely by this: labor shortage absorbs available workers long before growth creates new jobs. The care robotics that Japan has developed to meet this constraint illustrates how demographic pressure can become an innovation accelerator — a topic this journal has documented with the example of care robots.

The 15-Point Gap Between Seniors and Prime-Age Workers Represents the Real Reservoir

The employment rate for ages 55-64 in OECD countries is 64.6%. For ages 25-54, it reaches 80.1%. Fifteen and a half points of difference. This gap is a snapshot of a vastly underutilized resource.

To put it in perspective: bringing the employment rate of 55-64 year-olds to the level of the top 10% of performing OECD countries would be enough, according to the organization, to offset a substantial share of projected losses. This is not an unattainable objective: the leading countries in this ranking have senior employment rates around 75 to 80%. Sweden, New Zealand, Iceland, Germany to some extent, have shown that well-designed systems allow experienced workers to stay active without forcing them into positions unsuited to their physical condition or preferences.

What distinguishes these countries is not better health for their elderly population. It is a combination of institutional factors: defined-contribution pensions that make continued employment financially neutral or advantageous, flexible labor markets that allow part-time arrangements or reduced responsibilities, and corporate cultures that do not treat the 60-year-old worker as a cost awaiting departure.

France, by contrast, maintains an implicit labor market organization that pushes seniors out before age 65. Early retirement schemes, even reformed ones, signal to companies and workers that early exit is the norm. The costs of this norm are now quantifiable.

Mid-Career Mobility as a Productivity Policy

Adult training during working life is traditionally classified among social policies: helping people in career transition, supporting the unemployed, managing restructuring. The OECD proposes an implicit reclassification: in a context of labor shortage, mid-career mobility and training for seniors are primarily productivity policies.

The logic is as follows. A 55-year-old worker who remains in a position whose content has evolved without their skills having kept pace represents a productivity loss. Training them to master the current tools of their sector is not a cost of solidarity: it is an investment whose returns stretch over ten to fifteen years of additional activity. At the macroeconomic level, the difference between a stock of well-trained senior workers and a poorly trained stock reads directly in productivity figures.

This framing changes political calculations. Companies that resist training their older employees on the grounds that the return on investment would be too short systematically underestimate the relevant time horizon. Governments that fund continued training for seniors through the lens of intergenerational equity overlook the strongest argument: that of pure economic efficiency.

Digital skills and AI skills illustrate this phenomenon particularly clearly: their salary returns are already five times higher than those of a standard master’s degree. A senior who acquires these skills does not merely catch up: they access a segment of the labor market in tension, where demand exceeds available supply.

Policies That Work: What Leading Countries Do

The dispersion of performance among OECD countries on senior employment rates is considerable. It is not random. It reflects measurable policy choices, several of which have been subject to serious evaluation.

Germany combined work-time flexibility at the end of career with incentives for long contribution records. The Altersteilzeit scheme (part-time work before retirement), introduced as early as 1996 by specific legislation and supplemented since by more recent mechanisms, enabled a gradual transition that maintains the employment link rather than cutting it abruptly. The employment rate for ages 55-64 increased by 20 points over twenty years.

Sweden relied on two complementary levers. First, a notional account pension system that makes the choice to retire actuarially neutral: leaving at 63 or at 67 results in the same pension capital, simply distributed over different durations. There is therefore no financial advantage to exiting early. Second, a labor market that tolerates flexible arrangements and transitions between sectors, which facilitates mid-career mobility for workers whose original sector faces physical strain or restructuring.

New Zealand took a different approach, founded on administrative simplification: no complex scheme, but a legal framework that explicitly prohibits age discrimination in hiring and does not attach retirement to an obligation to cease work. The result is a labor market where retirement and employment frequently coexist, without social stigma.

These examples share a common trait: they do not seek to force workers to stay, but to eliminate institutional incentives to leave.

Immigration and Fertility: Real but Insufficient Responses

No analysis of demographic aging is complete without examining the two alternative responses typically proposed: increasing immigration and raising the fertility rate.

Immigration is the fastest response. It can offset losses in working-age population within years, whereas natural demographics require a generation. Countries that maintained their working-age population despite low fertility, such as Canada and Australia, did so largely through active migration policies. The problem is twofold. First, global competition to attract skilled workers intensifies precisely because all developed countries face the same problem at the same time. Second, immigration raises political tensions that make the necessary volumes politically difficult to sustain. Canada itself reduced its migration targets in 2024 facing political pressure on housing and services.

Fertility is the slowest and most uncertain response. No developed country has succeeded in durably raising its fertility rate to replacement level (2.1 children per woman) through public policy. France, long cited as a model with its rate around 2, has seen it decline since 2015. Pro-natality policies have marginal effects on the timing of births, not on the total number of children a woman will have in her lifetime. China illustrates the extreme complexity of the problem: even after abandoning the one-child policy, the desire for children does not return.

These two responses are not useless. But they are insufficient to offset alone declines in working-age population of 30%. Continued employment of seniors and mid-career mobility are therefore not options among others: they become necessary components of a strategy that must be, by definition, multidimensional.

What Companies Are Already Doing, and What Remains to Be Done

Companies are not passive in the face of this constraint. In sectors facing labor shortages, practices are evolving. Engineering, construction, health, and part of logistics have relaxed recruitment practices to integrate older profiles. Reverse mentoring programs, where seniors transmit their experience to juniors while receiving digital training, are beginning to spread in large European and North American companies.

The Japanese hospital sector, facing acute labor shortages, has developed positions specifically designed for nurses and physicians at the end of their careers, with reduced on-call duties and responsibilities refocused on knowledge transfer. These positions, which did not exist in traditional organizational charts, keep in work professionals who would have left and preserve clinical knowledge that takes decades to build.

What remains to be done is harder. It is about changing corporate cultures where the 58-year-old worker is implicitly considered less trainable, less adaptable, less profitable. These biases, documented in the literature on hiring discrimination, lead to decisions that are collectively irrational: a company that does not hire seniors participates in the labor shortage it otherwise complains about.

Public policy can play a role here, less through constraint than through correction of incentives. Training credits targeted at those over 50, tax adjustments on social contributions for part-time end-of-career jobs, or simply public data on the actual returns of senior training to counter the actuarial biases of HR departments: these tools exist, they are used by leading-ranked countries, and their diffusion remains limited.

The real issue is not whether rich countries will run out of workers. OECD data make this point difficult to contest. The issue is how quickly institutions, companies, and training systems will adapt to a constraint that resembles nothing that most advanced economies have experienced since the end of the baby boom. Countries that started early have a twenty-year lead. The others still have choices about their tools.

Sources

  1. OECD, Employment Outlook 2025 — https://www.oecd.org/en/about/news/press-releases/2025/07/oecd-job-markets-remain-resilient-but-population-ageing-will-cause-significant-labour-shortages-and-fiscal-pressures.html
  2. OECD Employment Outlook 2025 (official publication) — https://www.oecd.org/en/publications/oecd-employment-outlook-2025_194a947b-en.html
  3. OECD EO 2025 Chapter 5 - Mobility and Productivity — https://www.oecd.org/en/publications/2025/07/oecd-employment-outlook-2025_5345f034/full-report/component-9.html
  4. OECD - Ageing and Employment (2024 data) — https://www.oecd.org/en/topics/ageing-and-employment.html
  5. OECD Press Release July 9, 2025 — https://www.oecd.org/en/about/news/press-releases/2025/07/oecd-job-markets-remain-resilient-but-population-ageing-will-cause-significant-labour-shortages-and-fiscal-pressures.html
  6. Human Rights Act 1993 - New Zealand (official text) — https://www.legislation.govt.nz/act/public/1993/0082/latest/DLM304475.html
  7. IZA / Can Policy Facilitate Partial Retirement? Evidence from Germany — https://www.iza.org/publications/dp/9266/can-policy-facilitate-partial-retirement-evidence-from-germany
  8. OECD Employment Outlook 2025 - Country Note Germany — https://www.oecd.org/en/publications/oecd-employment-outlook-2025-country-notes_f91531f7-en/germany_7a8d6d9d-en.html