In a bid to get pensioners back on the job, Germany is offering a big-time tax break.
What happened: Germany approved a measure that will let retirement-age workers earn €2,000 a month tax-free starting next year. The government hopes the incentive will keep more Boomers working at least part-time.
Why it’s happening: A one-two punch of declining birth rates and longer lifespans means Germany’s population is aging quickly. This threatens to sap the country’s already-stagnant economy and stress its welfare system, with 9% of the labour force set to retire by 2035.
- To help fill the labour gap, Germany is betting on machines and AI; it’s even built up the biggest stock of robots in the EU. However, technology can’t yet replace retirees entirely.
In Canada: A similar fate awaits Canada’s economy. It might be tough to find a gig right now, but with all remaining Boomers set to turn 65 by 2030, the labour market is staring down the crest of the biggest retirement wave yet — which migration levels might not be able to offset.
- Ottawa knows it needs Boomers to keep on their grindset, publishing a report in 2018 detailing strategies to promote the labour force participation of older Canadians.
Why it matters: Successful methods elsewhere could be copied by Canada. It already looks like tax incentives are a viable solution. In Greece, the number of working retirees rose to more than 250,000 as of last month, from 35,000 in 2023, after it allowed older Greeks to continue working while retaining their full pensions and paying a lower tax rate.—QH