Raising employment among women and older workers: A policy lever for ageing economies

Declining working-age populations are set to weigh on growth across economies where the European Bank for Reconstruction and Development invests and beyond, with demographic projections suggesting substantial declines in employment-to-population ratios. This column describes how closing gender employment gaps and raising elderly labour market participation could substantially mitigate these projected declines in many ageing societies, but the scope for such gains varies across countries. Realising these gains would require coordinated policy interventions across childcare provision, pension reform, workplace flexibility, and re-skilling programmes.

As populations age after sustained periods of low fertility, shrinking workforces threaten to constrain economic growth and strain public finances. In this context, raising employment rates among women and older workers represents a powerful policy lever. In countries where participation remains below frontier levels, it could offset a large share of the demographic drag, whereas in economies with high workforce utilisation, further gains are more limited. This column draws on analysis from the new EBRD Transition Report (EBRD 2025) to examine the potential of such interventions and the policy mechanisms available to achieve them.

Quantifying the untapped potential

To assess the potential for expanding labour supply through higher participation, we construct forward-looking employment-to-population ratios under alternative policy scenarios (Figure 1). Our baseline projection applies current age-specific employment rates (observed in 2023) to the projected population structure in 2050 under the UN World Population Prospects medium variant. Under this baseline scenario, employment-to-population ratios for the population aged 15 and above are projected to decline substantially across many economies where the EBRD invests between 2023 and 2050.

We then examine two counterfactual scenarios that modify the age-specific employment rates applied to the 2050 population structure, while holding demographic projections constant. The first – a “gender gains” scenario – assumes that gender employment gaps within each age group converges to the 25th percentile currently observed across OECD economies. For instance, for the 30-34 age bracket, this corresponds to a gap of 6.9 percentage points, as presently observed in Belgium. Under these assumptions, economies with large gender employment gaps such as Egypt, Jordan, and Tunisia would experience increases in their employment-to-population ratios approaching 19 percentage points. In contrast, European economies with relatively low gender gaps in employment – for example, the Baltic states – would see limited to no gains from this channel.

A second “gender and ageing gains” scenario combines the gender convergence assumption with increased employment rates for older workers. In addition to closing gender gaps as described above, we raise employment rates for workers aged 60-64 and 65+ to the 75th percentile of age-specific rates observed across OECD economies in 2023. For the 60-64 cohort, this benchmark corresponds to an employment rate of 65.8% (equivalent to the level observed in Denmark) against a present average of 45.2% across the EBRD regions. Continued gains in healthy ageing – that is, improvements in cognitive and physical ability at older ages – can support increased participation for older workers, and historically such gains have been associated with higher earnings, increased hours per worker and higher productivity (IMF 2025). In economies such as Croatia or Romania, these increases in employment rates among older workers could fully prevent their employment-to-population ratios from falling below 2023 levels.

Figure 1 A combination of reductions in gender employment gaps and increases in participation of older people could offset most of the expected decline in employment-to-population ratios between 2023 and 2050

Note: This chart shows employment-to-population ratios for the population aged 15+ across three scenarios for 2050 compared with historical levels in 2000 and 2023. The baseline scenario applies current 2023 age-specific employment rates by five-year age group to projected 2050 demographic structures using UN WPP medium variant projections. The “gender gains” scenario builds on the baseline by reducing gender employment gaps within each age group to the lower of the current gap and the 25th percentile of the age-specific cross-country distribution of gender employment gaps in OECD countries for 2023. The “gender and ageing gains” scenario combines the gender gap adjustment with rising employment rates for workers aged 60-64 and 65+, which increase to the higher of current rates and the 75th percentile of the age-specific cross-country distribution of employment rates in OECD countries for 2023. Employment-to-population ratios are standardised to the 19th International Conference of Labour Statisticians (ICLS) definition by applying country-specific scaling factors derived from the ratio of 19th to 13th ICLS employment rates for the 15+ age group in 2023. For countries where 19th ICLS data are unavailable, continental average scaling factors are applied.
Source: UN WPP and authors’ calculations.

Policy mechanisms for expanding labour supply

Translating these counterfactual scenarios into outcomes requires addressing the underlying constraints that generate low employment rates. For women, labour force participation could be facilitated by policies that expand affordable childcare, parental leave schemes that nudge fathers as well as mothers to take time off, the removal of tax and benefit disincentives for second earners in households, the enforcement of pay-transparency rules that expose unjustified wage gaps, better access to flexible schedules, and the provision of lifelong learning opportunities over individual careers (OECD 2025), while ensuring that higher female employment is compatible with family formation. Measures to address traditional gender norms and cultural expectations around women’s and men’s roles in the household and workplace (Jayachandran 2021, Matavelli et al. 2025) would also be beneficial.

Labour force participation among older workers could be boosted by raising the age at which individuals are eligible for pensions, through schemes that offer phased or flexible retirement (where savings from later retirement are partially shared with the individuals in question), by fostering age-friendly work environments, and by expanding access to re-skilling programmes (Eurofund 2025). The latter is particularly relevant in the context of rapid technological change, as EBRD countries will need to boost productivity through technology adoption while digital skills decline sharply with age (EBRD 2025).

Conclusion

Systematic efforts to raise labour force participation among women and older workers offer tangible levers to mitigate demographic headwinds. The quantitative scenarios presented above demonstrate that achieving combined gender and ageing gains – through convergence to employment rates currently observed in high-performing OECD economies – could offset a substantial fraction of projected employment ratio declines across many EBRD economies. However, the heterogeneity in current participation rates across economies implies correspondingly varied scope for intervention, with the largest potential gains concentrated in economies characterised by pronounced gender gaps and low elderly participation.

Source : VOXeu