New research found that just 30.5% of those aged between 50 and 64 who became unemployed found work again.
The report from Business in the Community suggested that the over 50s demonstrated a substantial desire to work, similar to younger people, but found big hurdles in front of them.
Business in the Community's Rachael Saunders, director of age and intergenerational workplaces, said: "This latest research clearly shows that if you're over 50 and out of work, you are a lot less likely to get back into employment, especially compared to your younger peers.
"This is a sorry state of affairs. Not only are hard-working and highly skilled over 50s workers unfairly punished but we as a country also lose out.

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"Urgent action is needed if we are going to reverse this situation and we will continue to work with Government, business and local communities to keep people over 50 in work, and improve the prospects of marginalised and under-used over 50 workers."
The report said barely 1 in 3 people aged 50-64 started their own business, compared to a quarter of those aged 30-49 and only 8.6% of those aged 16-29.
Among those 50-64 year olds who ended up unemployed, 16.3% found a place on a Government employment and training scheme, in contrast to 11.1% of those 16-24 and 12.7% of those aged 30-49.
Pensions expert Dr Ros Altmann said: "Millions of over 50s are now looking to retire later – as working later in life becomes the new norm – so it is essential to ensure their skills are kept up to date, and there is support for them to even take on a new career to make the most of their energy and experience."
Dr Altmann, the Government's Older Workers' Business Champion, added "outdated and inaccurate perceptions can hold them back" from gaining work.
Doing unpaid work for a family business was at higher levels in the age group 50-64 compared to younger people, the report stated, with around 10.6% in this category.
Baroness Greengross, ILC-UK chief executive, said: "This report highlights the ongoing challenge that older people face in their efforts to continue working in later life. It dispels a number of myths around older people in the workplace and suggests that persistent stereotypes based on age serve as a significant barrier to employment for the over 50s.
"We all have an important role to play – and indeed an imperative to do so for the future sustainability of our economy and society at large – in changing such attitudes to maximise the potential of older workers."
A third report in the 'Missing Million' campaign, to be launched as a part of Responsible Business Week in April, will set out detailed recommendations for business and for government.