Germany's 'Silver Workers' Are Back on the Job

The German economy is booming, but many firms are suffering from a lack of qualified employees. Now, they are rehiring many of the graying former employees they were sending into early retirement just a few years before.

Peter Jöhnck spent one silent moment turning his tool over in his hands. It was just a construction worker's helmet, the kind he had worn for 30 years of his life. But after five years, it was this helmet that restored the engineer's sense of being part of the world he had missed so much. With it, the 63-year-old suddenly felt he had been catapulted back into working life.

The former retiree has been in charge of 2,700 employees from all over the world in India since the beginning of the year. He works 60 hours a week at temperatures around 35 degrees Celsius (95 degrees Fahrenheit) in the shade. "It's wonderful to be in demand again," he says.

Jöhnck worked as a construction manager at Siemens until December 2001. He built power plants in Germany and abroad in places like Turkey and Saudi Arabia. He had plenty of experience and he was in good shape physically, but he was 58. His employer thought that was too old and sent him packing into early retirement.

Jöhnck made himself useful by working for friends and relatives, most recently by renovating the house his parents live in. Then, in November, his phone rang. A Siemens employee asked him whether he could see himself managing the construction of a gas-fired power plant in Akhakol, India. Four weeks later, he was on the plane.

Siemens is having trouble finding qualified workers -- in its energy apartment alone, more than 800 positions are unfilled. The German economy is booming (more...), but there is simply a lack of skilled employees. Other firms are experiencing a similar situation.

Taken in by the 1990s obsession with youth, many companies sent their older employees into early retirement in droves only to regret those decisions a decade later. The situation worsened with the period of economic stagnation in Germany between 2001 and 2004, when cuts hit workers over 55 especially hard.

It is precisely this workforce that is now being re-hired. With increasing frequency, even regular pensioners who have already reached the legal retirement age of 65 can be found working on construction sites, as well as in other jobs.

There are 690,000 part-time workers in Germany who have passed the legal retirement age. If you add to that figure people under 65 who went into early retirement but have returned to work, there are 1.5 million people now working for a living who, only a few years ago, would have been completely written off by society as unemployable.

'Silver workers'

Jürgen Deller, a professor of industrial psychology at Germany's Lüneburg University, calls the post-pension employees "silver workers." His study of the same name involved him interviewing 148 senior workers aged between 60 and 80. They included managers of companies listed on the stock exchange, former ministers and even bakers and carpenters. Deller's conclusion: "Older people are needed in all areas and on all levels. Every level of complexity is in demand."

Research by the consulting firm Kienbaum yielded the same finding: "Small companies commonly extend the employment contracts of senior citizens or put them back to work for specific projects," says Kienbaum's Erik Bethkenhagen.

Senior workers like Wolfgang Löffler can offer employers much that their younger colleagues have not even had a chance to acquire yet -- detailed knowledge of a firm's structure, experience and a sense of routine supplemented by a great store of professional knowledge.

The social insurance salesman worked in Commerzbank's human resources department until October 2005. He was considered an experienced administrator and even meticulously planned his retirement, coming up with a schedule that involved trips to the gym three days a week to keep his back in shape, attending an Italian course on two other days and using the rest of his time to read and meet friends.

But his old employer threw a spanner in the works of his retirement plan only about a year later. "We need you," Rainer Dahms, the human resources director, told him. The reason? The bank uses a special system to file personnel data. And no one is as familiar with this system as Löffler.

Now he is back at the bank's administration department three days a week, working up to 100 hours a month and making €2,500 ($3,362). The money is the weakest incentive for Löffler: He has a respectable pension even without the extra income. It's just "a wonderfully liberated feeling because I work without being integrated into the hierarchy," he says. He's also working at his own will.

Like Löffler, many re-activated pensioners work for the sake of the feeling of recognition it gives them, as Deller also discovered in his study. Senior workers could be a real factor when it comes to economic competitiveness, the researcher believes.

If companies didn't maintain ties with pensioners who are willing to work, those pensioners might well work for the competition, he says. And when a lack of experts leaves a company unable to meet its contractual obligations to its customers quickly enough or with sufficient quality, it has a real problem.

Rebuilding coal-fired power plants in Germany, for example, requires a know-how that young university graduates don't have, says Ralf Gilgen, the CEO of Steag Encotec, the power plant division of Germany's RAG industrial group. For years, the manager has successfully strived to create ties between his company and experienced persons older than 65 -- usually by means of fixed-term contracts and clearly limited tasks.

He often has between 15 and 20 persons older than 65 whom he can fall back on. The oldest is 71.

Many of the elderly experts are no longer willing to go through gruelling full-time work. They have their demands. Many of them want to look after their children or grandchildren. Some pursue their hobbies or play sports and greatly value flexible schedules. Or they try to combine their new professional tasks with pleasure. "Many apply for a work assignment abroad and then spend another two months there on holiday," says Gilgen of Steag. "South Africa is very popular with our golf players, for example."

Closing the gap

Small businesses are well known for meeting the requests of their senior workers, since many are particularly dependent on help from those workers. Younger qualified job-seekers are often drawn to the companies with the most well-known names, or want to move to attractive cities -- so that, in many branches of trade, hardly any job applicants remain.

Engineers are especially rare and in demand. In this sector, too, some 23,000 positions remain vacant today in Germany. Experts from abroad are hardly suitable for closing the gap. Although Germany has a green card program for highly experienced workers, the country's immigration law stipulates that companies must pay a minimum salary of €84,000 ($112,735) to workers recruited from abroad from countries like China and India. It's a high salary requirement that is difficult for small businesses to meet.

That's why Kornwestheim-based factory planner Fahrion is falling back on its own retired workers. Seven of company's 85 employees are older than 65. Poaching younger skilled employees from other companies is too expensive, says company director Otmar Fahrion.

And so people like Hans Graalmann are put to use. The mechanical engineer, who has a Ph.D., reached the legal pension age last year, but the 65-year-old just kept working -- 11 hours a day, five days a week. He wants to work for as long as he feels like it -- and his boss is glad to hear it: "It's practically impossible for us to find a specialist of this caliber."

Steffen Haas recognized the trend in 2006 and created the Internet platform "Experience Germany," a placement service for senior workers that already has 3,500 qualified workers in its files. Most companies Haas works for employ such senior workers in the context of temporary projects and at a daily rate of €400 ($537).

Sixty-seven-year-old Wilhelm Günther is one of them. The master joiner is setting up a wood factory in Madagascar for the Frankfurt-based company EGC. Neither the skills of the local workers nor the quality of the machines meet German standards. When a hammer breaks, it can take two hours to replace it. It's a test of patience that was too much for Günther's predecessor. He returned to Germany and Günther took over his job.

Companies will have to rely on senior workers even more in the future, since demographic developments in Germany entail a decline in the percentage of young workers. The former baby boomers are now 40, and the following, low-birth rate generations have long been flocking onto the labor market. Employing senior workers will therefore continue to be a trend, and one that will probably become more pronounced.

True, Germany still struggles with a high level of basic unemployment in the area of senior workers. And many older people are still desperately searching for a job. But many of them are also finding work again.

A Growing Trend

The number of employees subject to social insurance contributions and older than 55 rose by six percent between September 2005 and September 2006 -- and the trend is for the figure to continue rising.

And Germany's renaissance in senior workers is far from unique. In Sweden and Switzerland, more than 10 percent of those aged between 65 and 69 are employed, according to a study by the Organization for Economic Cooperation and Development (OECD); the figure for Norway is even higher than 20 percent. Compared to these countries, Germany is actually lagging behind.

The reason is simple: Lawmakers in Berlin provides no financial incentives for people who have reached retirement age to continue working. Instead, laws are aimed at keeping pensioners off the job market by all means.

Employers have to pay benefits for a 66-year-old employee in Germany, for example, but that doesn't have any impact on the employee's pocketbook, since the worker already qualifies to receive the benefits free of charge.

Moreover, Germany has a fixed legal pension age -- one that does not take into account at what age individual employees actually entered the job market.

Flexible Models Needed

Experts have long been demanding a gradual transition out of working life. "We need to have reduced working time and free time side by side," says André Schleiter, who has long researched workers for Germany's Bertelsmann Foundation. Receiving a partial pension should also be possible, he argues.

Such models have long become reality in other countries. In Switzerland the electrotechnology firms ABB and Alstom and aviation and rail track producing company Bombardier founded the mutual consulting firm Consenec 14 years ago. The unique aspect of this decision is that the executive managers of the three companies are obliged to give up their positions at age 60, whereupon they either have to work as consultants for Consenec -- or retire.

The executive level of these companies is thereby constantly rejuvenated, and the former executives can freely determine their share of free time and work as they get older. But their knowledge is not lost. Eighty percent of Consenec's 48 retirement-age consultants and former executives continue to provide expertise to their former parent companies.

In Gemany, a similar model has been implemented by the Stuttgart-based electronics conglomerate Bosch. The company founded its own Bosch Management Support Group (BMS) in 1999 -- a kind of collecting pond for those retiring from the company. Those who stop working at age 60 can have their names placed in the BMS files. About 350 employees can now be found there, from lower-level employees to top managers.

"Cooperation with the pensioners is working smoothly," says BMS director Wolfgang Mierzwa -- a view he shares with other employers. Companies also value the social skills of senior workers.

While university graduates still have to learn how to motivate and lead a team, older employees often have years of experience in that area.

When it comes to everyday cooperation within companies, senior workers could "build internal bridges and defuse conflicts," Kienbaum manager Bethkenhagen agrees.

Since they are no longer driven by the ambition that comes with the desire to perfect their careers, senior workers approach problems in a more relaxed way. They're not competing for jobs with their younger colleagues, after all.