One of the key characteristics of the labor market in the Republic of Croatia is the gradual reduction of available workforce, which is a consequence of negative demographic trends and emigration. Aging of the population represents a serious challenge for the country's economic and demographic development, as it leads to a reduction in the number of working-age population and overall population activity. In addition, aging of the population in Croatia reduces the productivity of the workforce, increases inequality between highly and low-skilled workers, as well as between men and women, and reduces the quality of life of older people. This situation in the labor market can result in increasing pressure on public spending for the needs of the elderly population, which will represent a significant burden on the social protection system, intergenerational solidarity, and healthcare system. The main goal of this research is to conduct a comprehensive analysis of factors contributing to demographic decline in Croatia, estimate long-term implications on the labor market, and consider political responses aimed at reducing inequality, creating an environment adapted to older people, and encouraging the employment of older workers. The research aims to identify the causes of low levels of activity among the elderly population and explore effective measures to increase their labor participation, with the aim of ensuring sustainable economic growth, protecting future production potential, and maintaining stability in the labor market.