What Helps More Against the Skilled Labor Shortage: the “Active Pension” or Promoting Employment of 55+ Professionals?
- Marcus
- Oct 26
- 5 min read
Even if the economy is wobbling at the moment, Germany’s shortage of skilled labor is a structural reality and one of the country’s biggest economic challenges. Across nearly all industries – from crafts to care, education, and IT – qualified workers are in short supply.
The new federal government under Friedrich Merz has introduced the so-called “Active Pension” (Aktiv-Rente) – an initiative designed to motivate older employees to continue working beyond the statutory retirement age.
At the same time, among professionals aged 55 and over who are looking for work or have withdrawn from the labor market lies a much larger and largely ignored potential.
So the key questions are:
Which measure will have a stronger impact against the skilled labor shortage – the Active Pension or targeted support for 55+ professionals?
And how can policy make the employment of older workers attractive for companies?
The Active Pension: Tax-Free Incentives to Keep Working
What’s Planned
The government plans to start the Active Pension on January 1, 2026. The goal is to let retirees work longer with better tax terms.
Key points of the model:
Up to €2,000 per month can be earned tax-free, in addition to pension income.
Only health and long-term care insurance contributions apply.
The rule applies only to dependent employment, not to the self-employed.
Drawing a statutory pension is a prerequisite.
The aim is to keep experienced professionals working longer and help reduce labor shortages.
Who Could Benefit
According to Destatis, around 13% of 65- to 74-year-olds in Germany were still employed in 2023.
In total, around 715,000 retirees primarily lived on income from work (Destatis, 2024).
Between 2012 and 2021, the employment rate of 65- to 69-year-olds rose from 11% to 17%.
Government sources estimate that about 168,000 people would directly benefit from the new regulation.
The fiscal cost is expected to reach around €890 million per year, primarily due to lost tax revenue.
Opportunities and Limitations
Advantages:
Creates a tangible financial incentive for post-retirement employment.
Helps preserve know-how and facilitates knowledge transfer in companies.
Sends a strong social message: work in later life is valued.
Limitations:
Health and physical constraints are a problem for many older workers.
Small target group – few want or are able to continue working.
Limited structural effect on age discrimination or lifelong learning.
Modest quantitative impact: 168,000 people equal less than 0.4 % of the workforce.
The Active Pension is a positive move, but it offers only limited help for the labor shortage.
The Underrated Potential: Bringing 55+ Professionals Back Into Work
The Active Pension targets those over 65. But the 55- to 67-year-olds are a much larger workforce group.
The Current Situation
By the end of 2024, about 680,000 people aged 55+ were unemployed in Germany, according to VdK.
The employment rate among 55- to 64-year-olds is roughly 74.7 %.
Many are affected by underemployment, temporary contracts, or precarious conditions.
Nearly one-third of workers over 50 plan to retire early – often due to workload, health issues, or lack of prospects (Human Resources Manager, 2024).
Why This Group Matters More
They bring experience, training, and workplace know-how.
They are typically still fully capable physically and mentally.
They could close short-term gaps – especially in industry, crafts, public administration, and healthcare.
And they form a much larger group: more than 7 million employed people in Germany are between 55 and 65 years old.
Direct Comparison: Active Pension vs. Support for 55+ Professionals
Summary of the Comparison
The Active Pension targets a small but valuable segment – people who are healthy, motivated, and already active.
Supporting 55+ professionals reaches a broader group with greater workforce impact.
The Active Pension symbolizes valuing late-life work, but promoting older professionals drives systemic change across attitudes, skills, and structures.
How Policy Can Make Hiring Older Workers More Attractive
1. Wage subsidies & reduced social contributions
Provide employer subsidies for hiring or retaining older professionals.
Temporarily lower employer social security contributions.
Incentivize age-friendly workplaces (ergonomic redesign, digital aids).
2. Targeted training & lifelong learning
Individual training budgets for employees aged 50+.
Promote digital and AI skills by integrating them with modern learning platforms.
Partnerships with universities, adult education centers, and industry academies.
3. Matching & mentoring programs
Job-matching initiatives that focus on skills rather than age.
Cross-generational mentoring to transfer expertise.
Regional “Silver Talent” hubs to connect mature professionals with employers.
4. Flexible work models
Enable part-time, job-sharing, and remote work for longer participation.
Temporary project-based roles (“internal gigs”) instead of fixed full-time jobs.
Smooth transitions between employment and semi-retirement.
5. Combating age discrimination
There should be stricter enforcement against age bias in hiring processes.
Public campaigns to reposition older workers as value creators.
Showcasing successful “Best-Ager” initiatives as role models.
A Simple Calculation
If 100,000 55+ professionals were successfully reactivated through targeted programs within a year, and each earned an average of €35,000 annually, this would add €3.5 billion to Germany’s total wage volume.
Even if the state invested 10 % (€350 million) in incentives, the net gain – through taxes, social contributions, and consumption – would be substantial.
By contrast, the Active Pension costs around €890 million annually while activating only a fraction of that workforce.
“AND” Instead of “OR” – With One Important “BUT”
Both approaches can help – but with different levels of impact:
The Active Pension is a sensible, symbolic measure and a pragmatic bonus for those willing to work longer.
The promotion of 55+ professionals serves as a strategic lever to boost labor market resilience, increase age diversity, and address shortages in a sustainable manner. Key recommendations include providing employer subsidies for hiring older workers, introducing individual training budgets for those aged 50+, launching job-matching programs focused on skills, expanding flexible work models, and enforcing policies to prevent age discrimination.
Ideally, the government should combine both:
The Active Pension honors experience – The promotion of older professionals unlocks the future.
Only when experience and perspective work hand in hand can Germany truly ease its skilled labor shortage.
And the “BUT”?
Both measures must avoid crowding out younger workers. If a 58-year-old replaces a 35-year-old, or a 68-year-old takes a role from someone in their 40s, nothing is gained.
Is this perspective subjective? Absolutely – I’m 57 myself. Is it comprehensive? Certainly not.
For real change, take action: advocate for policies that empower both older and younger professionals. Support initiatives in your organization or network that target age diversity. Encourage employers, colleagues, and policymakers to pursue both the Active Pension and the active integration of professionals aged 55 and above.
Let’s move beyond reflection—be part of the solution now.
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