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 cost‐productivity 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.