Selected Issues Papers

Increased longevity and population aging pose growing fiscal challenges for Spain, which can be mitigated by encouraging greater labor force participation among older workers. Over the past decade, increases in both the minimum and standard pensionable age have led to longer average careers, resulting in significant aggregate employment rate gains. However, a considerable proportion of workers still retire early or exit the labor force several years before reaching retirement age. Therefore, policy action across a broader range of areas is needed to foster further employment growth, by addressing critical issues and constraints to labor force participation among workers aged 55 and above. These include deteriorating health conditions, the need for flexibility in work arrangements, other household-related time commitments—such as caregiving for family members, maintaining in-demand skills, and the financial (dis)incentives embedded in unemployment support programs.