More than a million old people cannot get a job because employers will not invest in training or make minor adjustments for disabilities, the TUC claims.
A report by the union organisation warned yesterday that industry and the Government had to defuse the "demographic time bomb" of an ageing workforce being forced out of jobs and on to benefits.
The study showed that more than one million unemployed people aged between 50 and 65 wanted a job.
Only one in eight of people in this age bracket who were not working had retired early and were classed as "affluent professionals" while many were surviving on state support, said the report.
The TUC predicted that over the next decade the number of people aged between 50 and 69 would increase by 17 per cent, massively increasing the ratio of pensioners to working people.
TUC deputy general secretary Frances O'Grady said: "Most baby boomers are not retiring early to cruise around the world or go bungee jumping.
"They have been dumped out of work and on to the scrap heap and are scraping by on benefits or small work pensions. By refusing to retain and recruit older staff who want to work, employers are accelerating the demographic time bomb the economy is resting on."
The TUC called on employers to carry out an age audit of their staff to establish an age profile of their workforce as part of a move to eliminate age discrimination and retain older workers.
Susan Anderson, director of Human Resources Policy at the CBI, commented: "Employers are very aware of the benefits and advantages which older people offer."