Ageing and employers' perceptions of labour costs and productivity: a survey among European employers

Purpose - The purpose of this paper is to examine employers’ perceptions of changes in the labour
cost-productivity gap due to the ageing of the workforce, the effects of tenure wages and employment protection on the perceived gap, and whether a perceived labour cost-productivity gap affects employers’ recruitment and retention behaviour towards older workers.
Design/methodology/approach - The authors analyse surveys administered to employers in
Denmark, France, Germany, Italy, the Netherlands, Poland and Sweden.
Findings - Approximately half of employers associate the ageing of the personnel with a growing
gap between labour costs and productivity. Both the presence of tenure wages and employment protection rules increase the probability of employers perceiving a widening labour cost-productivity gap due to the ageing of their workforce. A counterfactual shows that even when employment protection and tenure wage systems are abolished, 40 percent of employers expect a net cost increase. The expected labour costproductivity gap negatively affects both recruitment and retention of older workers.
Originality/value - In this paper, the wage-productivity gap is examined through the perceptions of
employers using an international comparative survey.