Around one third of small and medium-sized enterprises (SMEs) in Germany allow employees to continue working beyond the statutory retirement age, according to a recent survey by KfW Research. The study, conducted as part of the KfW SME Panel in September, found that 32.4 percent of SMEs offer such opportunities.
The likelihood of continued employment for older workers varies significantly depending on company size and industry. Among firms with at least 50 employees, 71 percent provide options for post-retirement work, while only 26 percent of micro-businesses with fewer than five employees do so. Manufacturing companies are more likely to retain older staff compared to sectors like construction.
Over the past decade, labor force participation among Germans aged 65 to 69 has risen from 14 percent in 2014 to 21 percent in 2024, surpassing the European Union average. This increase is largely attributed to the gradual rise in the statutory retirement age to 67 years. Despite this trend, demographic changes are expected to reduce Germany’s working-age population by about 9.4 percent by 2035, while the proportion of older individuals continues to grow. This shift is intensifying existing shortages of skilled labor, which already affect business operations in roughly one third of German enterprises.
In response, the federal government plans to introduce an active retirement scheme at the beginning of next year. The initiative will allow retirees to earn up to €2,000 per month tax-free on top of their pension income. However, it will exclude those in mini-jobs, self-employed individuals, public servants, and early retirees. The goal is to create financial incentives for older people to remain employed longer and help alleviate labor market pressures.
“Keeping older workers on the payroll is already an established tool in many businesses. Active retirement can make an important contribution by creating additional incentives and thereby addressing skills shortages,” said Kathrin Schmidt, author of the study at KfW Research.
“Smaller businesses in particular exhibit potential for expanding their offering.”
Further information and the full study are available at: