The pension wave is rolling in on enterprises
Baby Boomers are reaching retirement age, leaving significant gaps in the labor market. Many even want to retire early. How are companies coping?
A retirement wave is rolling onto the German labor market. Baby Boomers are about to retire – and companies are running out of time. By the middle of the next decade, around four million employed people from the strong birth cohorts of 1954 to 1968 will be retiring. The Berlin economy alone is expected to face a shortage of over 400,000 skilled workers in around ten years, with a current deficit of 90,000 qualified employees, according to calculations by the Berlin Chamber of Industry and Commerce (IHK).
Moreover, many older workers want to retire early. According to a survey by the Institute for Occupational Health Consulting (IFBG) commissioned by Techniker Krankenkasse (TK), almost every third employed person aged 50 and over (31.3 percent) wants to leave their job earlier.
Figures from the German Pension Insurance (DRV) confirm this: Of the around 953,000 people who received an old-age pension from the statutory pension insurance for the first time in 2023, more than half (555,000) had not yet reached the regular retirement age.
Adieu Expertise?
The consequences can be dramatic, especially for small businesses. As experienced skilled workers leave, companies also lose valuable knowledge. While more and more are saying goodbye, not enough younger employees are stepping in. According to IHK data, the search for a replacement in the federal capital takes an average of over six months. Often, there is little time for a proper handover, or employees retire without a successor being arranged.
Therefore, it is in the interest of companies to retain older employees. Some companies have recognized the problem and introduced special programs to retain their older employees, as shown by a survey by the German Press Agency among selected large companies.
"It's high time to rethink retirement," says Continental's personnel director, Ariane Reinhart. "Just like with working time arrangements, companies need the necessary scope for design here as well." To keep employees just before or in retirement, Continental has set up a special program in which older skilled workers form a competence pool that the company can draw on in case of staff shortages or projects, a spokesperson said.
Lufthansa also focuses on the re- and continued employment of experienced specialists and managers, a spokesperson said. The goal is to meet the shortage of skilled workers through experienced experts and thus secure the transfer of knowledge between generations. Mercedes-Benz also provides similar information upon request. For example, experts who have left due to age could contribute their knowledge on a time-limited basis in project activities.
Success model: flexible working hours?
While companies are increasingly focusing on cross-generational knowledge exchange, older people are looking for work models that suit their personal interests, says economist and vice president of the Institute for Employment Research (IAB), Ulrich Walwei. "The challenge is to design working conditions that meet the needs of older employees as well as the strategic goals of the company."
According to a TK survey, flexible working hours (73.7 percent) and higher pay (66.5 percent) could deter older workers from retiring early. It's therefore no surprise that large companies like Deutsche Bank, Commerzbank, or Allianz, according to their own statements, are loosening their employees' working hours or enabling hybrid work. However, "This is not easily achievable in all jobs, especially in shift work," says pension expert Johannes Geyer from the German Institute for Economic Research (DIW). Only slightly more than half (57 percent) of the over 300 employers surveyed nationwide on behalf of the TK study offer more flexible working hours. Similarly, only about half of the employers (48.8 percent) implement the possibility of individually shaping the transition into retirement. For companies, ensuring the production process is more important than keeping many older workers employed, explains pension expert Geyer.
Companies are grappling with the impending retirement of Baby Boomers, who make up a significant portion of the workforce. The approaching retirement wave could lead to a skills shortage, as many of these workers want to retire early. Consequently, working hours become a crucial factor in retaining these experienced employees. Flexible working hours have been identified as a potential deterrent for early retirement, making it an appealing option for both companies and older workers.
