Human Resources and Social Development Canada's Expert Panel on Older Workers has released a report, titled Supporting and Engaging Older Workers in the New Economy that includes 13 recommendations that address government policies relating to mandatory retirement, pensions and new transition approaches to retirement; as well as, recommending that the federal government expand its tracking and study of this demographic group and improve the monetary safety net available to displaced older workers.
The panel was established in 2007 to examine “the current situation and future prospects of older workers, and to make recommendations to the government”, particularly focusing on the labour market. The panel defines “older worker” to mean 55 years or above.
The panel chose twin themes to guide its work: “enhancing the labour market prospects of older workers and supporting older worker adjustment, with special attention to the circumstances of displaced older workers”. A number of factors played into the examination, such as the general aging of the Canadian population, barriers to the participation of older workers in the labour market, challenges employers face with older workers, skills and education among the older population, and relevant government policies.
Background
Over the last few decades, the labour landscape in Canada has changed as dramatically as the tar sands of Alberta. In particular, and of special concern to the economy, is the aging of the workforce.
While economic growth has kept pace with other countries in the Organisation for Economic Cooperation and Development, Canada's productivity has lagged behind, notably when compared with the United States.
Still, overall employment has dropped five percentage points in 15 years, and labour force participation has jumped by more than 45 percent in the last 30.
As the Canadian economy and labour market have changed, emerging industries, such as technology and service, have grown; while some traditional ones, such as manufacturing, have declined. Accordingly, the market demands adjustments from workers. This means either training to fit the needs of one of the growing industries, relocating to find work in the same industry, or a combination of the two.
According to the report, Canada's labour market flexibility is an important reason that the economy has performed strongly. “Production responds well to economic shocks and … adjustment takes place relatively quickly.”
However, not all regions, industries or segments of the labour force have experienced this general market prosperity. Older workers (those aged 55 and over) in particular have not fared as well as other groups.
Older Workers in the Labour Market
In 1971, 15 percent of the Canadian population was 55 or older. That number rose to 25 percent in 2006, and is projected to continue to rise-and in fact to accelerate-over the next several decades.
Focusing on those aged 55-64, the proportion among the population rose from 11 percent to 14 percent between 1976 and 2006. Over the same period, however, the proportion of workers in that age group only increased from 10 percent to 12 percent.
What this means is that the work force in Canada is aging. And without action, this factor could lead to significant negative changes in the economy. Older workers tend to participate less in the labour market, work fewer hours and usually choose to retire before 65. Spread across the entire Canadian economy, these changes slow the growth of the labour force, and consequently reduce total and individual economic output. “If these effects occur, they would adversely impact Canadians' standard of living and pose a significant challenge to the Canadian economy.”
While around 59 percent of workers between 55 and 64 participate in the labour market-which is not too far off the overall rate of 67 percent-only 56 percent of persons in that age group are actually employed, compared to 82 percent in the 25-54 age group.
In addition, older workers commonly work in “non-standard” situations, involving fewer hours and less stability. These types of arrangements can be beneficial for workers who choose other priorities, such as family, over work; retired persons who want to supplement their pension income; or others who are physically unable to work regular hours.
However, the report's authors suggest that the proliferation of part-time work among older workers may actually point to a lack of full-time employment opportunities for this age group; and that there are likely many older workers who want to work full time, but face barriers of opportunity.
And that is just one of numerous obstacles older workers face when seeking employment. They can “face considerable obstacles to labour force participation, including employer attitudes, access to training, and disincentives and barriers to working past the traditional retirement age.” As a result, older workers spend much more time between jobs than other workers. This is especially unfortunate since a large amount of workers aged 55-64 lose their jobs involuntarily. Moreover, when they find new jobs, they generally earn less than in their previous position.
If that's not enough, concentrations of older workers are often found in declining industries, such as commercial fishing, and communities based around a single industry, and thus are at greater risk of losing their jobs involuntarily, and lacking the training or education to find another. They can also come across barriers in getting the training or education they need, often in the form of biased employers; and they may feel more acutely the costs associated with losing a job and finding a new one, such as the financial as well as emotional cost of relocating from a long-term residence.
Furthermore, older workers must contend with employer bias and agism when looking for jobs; and they must face off against that fearsome megalith known as the Internet. Other considerations are at play in the changing Canadian labour market. Retiring baby boomers and low national birthrates have led to declining growth in the overall labour force, a decline that even increased immigration will not cover. Thus, increasing older workers' participation in the labour market would help to maintain growth in the labour force and the economy at large.
Training and education are especially important to the success of older job-seekers.
Recommendations
The advantages of increasing older workers' participation in the labour market are clear: It could “increase national income, lessen fiscal pressures on governments caused by a shrinking tax base, and alleviate dependency and expenditures on public programs for older individuals. In the labour market, increased participation can alleviate labour shortages and result in a higher standard of living for older individuals who continue to work.”
But how to encourage older workers to participate?
The report's authors point to three areas of action to enhance older workers' prospects in the labour market:
- Addressing agism and myths about older workers
- Educating individuals, especially employers, about the importance of training and education, and recognizing job-related skills and experience
- Encouraging governments and employers to increase flexibility for transitions to retirement and address existing disincentives to labour force participation that arise from the pension and social security system
Based on these areas of action, the panel lays out 13 recommendations, addressing government policy, general awareness and understanding regarding the issues surrounding older workers in the market. The first three recommendations are particularly relevant to employers:
1. That the federal government, in consultation with the private sector, unions and civil society, undertake a comprehensive and sustained awareness campaign to promote the value and benefits to employers of continued and active participation in the labour force, to reduce agism and to remove negative stereotypes surrounding older workers.
2. That the federal government eliminate mandatory retirement in the federal jurisdiction by amending the Canadian Human Rights Act to extend the coverage of the Act by removing exceptions that have the effect of permitting mandatory retirement for persons aged 65 and older.
3. That the federal government work with provincial and territorial governments to promote the value, benefits and importance to employers of increasing the levels of training and literacy, both in the workplace and through other programs, and also to promote the need for continuous learning throughout individuals' working lives.
At the release of the report, the government indicated its support of initiatives such as those outlined in the report. MP Joe Comuzzi said “Our government is committed to supporting low-income seniors and giving those seniors who choose to work the financial flexibility they desire in retirement”.
In the 2008 federal budget, the government announced a number of plans to encourage older workers to participate in the labour force:
- Providing funds to help seniors and others recognize the signs and symptoms of elder abuse and to provide information on what support is available
- Funding projects in communities across Canada to help seniors bring their leadership, energy and skills to the benefit of communities
- Enabling many low-income seniors to benefit from increased monthly benefits available under the GIS and to make a one-time application for GIS.
- Establishing the National Seniors Council to advise the government on issues of importance to older Canadians
- Providing tax relief each year to Canadian seniors through pensions income-splitting and enhancements in the age and pension income credits
- Enabling seniors to build their retirement savings in Registered Pension Plans and Registered Retirement Savings Plans until age 71
These programs touch on the issues of agism, income supplementation and awareness, and may offer some small encouragement for organizations to recognize older workers' existing skills and education, but they don't directly address transitional workers and new training for displaced older workers. It remains to be seen how the government will react to the report and whether it will act on the broad recommendations therein. Moreover, the upcoming election could endanger some or all of these initiatives.
Employers, on the other hand, can avoid the lengthy, recursive and often inconclusive government processes of study and reporting. Private and public employers can take the lead and even gain a competitive advantage by hiring or re-hiring older persons to fill vacancies for skilled workers.
“Both individuals and employers can benefit significantly. Workers would have improved career opportunities and retirement options, and employers would benefit from the increased output that would result from greater labour force participation of experienced workers.”
To read the full report, visit www.hrsdc.gc.ca/en/publications_resources/lmp/eow/2008/page00.shtml.