Everyone retires at 70, Italy lags behind in productivity

Italians currently working will have to retire later than their parents did. And the increase in average life expectancy is only partially responsible.

The new OECD report on “ Employment Prospects 2025 ” reiterates that Italy will face an unprecedented structural challenge in the coming decades: a combination of demographic decline, stagnant productivity, and low labor force participation.

Italy moves towards raising the retirement age

All of this will put pressure on the country's economic and social security systems. The only way to save public finances and ensure family well-being will be to encourage workers to stay in the workforce for a certain number of years, rather than sending them into retirement.

The grim picture painted by the OECD shows that between now and 2060 , the Italian working-age population will decline by 34% . And the ratio of elderly people dependent on public finances to working people will go from 1 in 2.4 to 1 in 1.3 . In other words, fewer and fewer workers will have to support a growing number of pensioners. Without corrective measures, this would be enough to ruin the public finances .

Over the same period, the ratio of employed people to the total population is expected to decrease by more than 5 percentage points, unless significant interventions are implemented.

If labor productivity in Italy continues to grow at the same rate as in the 2006-2019 period (-0.31% per year), GDP per capita will contract by -0.67% per year until 2060 .

Over the past two decades, Italian pension reforms have already had an impact on senior workers: between 2000 and 2023, the employment rate of 55-59 year-olds increased by +31.8 percentage points (13.7 points higher than the OECD average), while that of 60-64 year-olds rose by +25.7 points (20.1 points higher than the OECD average).

But even raising the retirement age alone without other corrective measures, according to the OECD, is not enough. This is especially true given that 42% of Italian workers are employed in physically demanding jobs. At the same time, the OECD certifies that only 40% of Italians actually work in occupations that value experience.

Intergenerational inequalities have also worsened: in 1995, young people (25–34 years old) earned an average of 1% more than those over 55; today, however, seniors earn 13.8% more than younger people. If this trend is not reversed, the OECD warns, social tensions and distrust in the system will worsen.

Retiring at 70

The OECD does not make estimates, but by making projections, if the system is to hold up without strong immigration , nor productivity growth, a retirement age of around 69-70 years can be expected by 2060 for the full old-age pension .

OECD proposals to reverse the trend

The path indicated by the OECD to reverse the trend develops along four lines:

• increase in female employment;
• more effective use of regular immigration;
• recovery of productivity;
• lengthening of professional life (i.e. retiring later).

The OECD emphasizes that closing at least two-thirds of the gender employment gap and increasing the participation of healthy older workers could neutralize the negative effect of aging on GDP per capita growth. However, returning to robust growth will require further efforts on productivity , an area in which Italy remains fragile.

Real wages are falling

Meanwhile, Italy has seen the worst decline in real wages among major OECD economies: at the beginning of 2025, wages were still 7.5% lower than in 2021, due to rising inflation and the difficulty of collective bargaining agreements in regaining lost purchasing power. The prices of goods and services, in short, have risen more than wages.