"They can do something, they belong... We must involve these people in our society," SPD chairman Franz Muentefering told an employers federation congress.
Muentefering, set to become labour minister and deputy to conservative Chancellor Angela Merkel in a coalition government, said that only 39 percent of Germans aged 55 to 64 were currently working.
That compared with 65 to 70 percent in Scandinavian countries.
Merkel told the same congress that German firms must give older employees a chance to stay working.
BDA employers federation chief Dieter Hundt agreed that the costly programme of early retirement for olders workers who have been made redundant had to end.
Germany plans to increase to 63 from 60 the age at which Germans can receive a partial pension. The conservatives and SPD, in talks to form a power-sharing alliance, also back raising the age for a full pension to 67 from 65.
Merkel told the congress that the parties had agreed that the hike should take place in stages from 2012 until 2035.
"I believe that is the right course," she said.
Germany's ageing population and shrinking number of workers paying social security is severely straining its pension system, financed by automatic deductions from wages.
Muentefering has outlined plans to boost the numbers of older people in employment, both for their own sake and so that they contribute towards, rather than take from, the social security system until much nearer 65.
Muentefering, who is himself 65 years old, has suggested that companies that take on an older unemployed person could be offered a limited subsidy.
The SPD leader, head of the party's delegation in coalition talks, repeated his hope that pensions would remain steady in the coming legislative period. The parties also hope that contributions will also be unchanged.
German workers and employers currently pay 19.5 percent of employees' gross pay for future pension cover.