Human Resources and Social Development

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Human Resources and Social Development
DRAFT
Toward an older worker strategyEnsuring
economic growth for the 21st Century
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Toward an older worker strategy Ensuring
economic growth for the 21st Century

• Diagnostique
• Older workers challenges
• OECD suggested path forward
• International experience

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The age structure of Canadas population is
changing
Dependency Ratio (Population 65/Population
15-64)
Source Statistics Canada and OECD
Population aging is accelerating in varying
degrees across the country
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and Canadians are living longer, healthier
lives
Life expectancy, expected years in retirement and
effective retirement 1970 and 2005
Women
Source OECD
Aging combined with more years in retirement
brings forth many challenges
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Labour force growth will slow considerably
Expected Labour force growth
Labour force growth
2006-2056
1956-2006
Source OECD
Note Other OECD countries forecasts refer to
2000-2050 (Source OECD and HRSDC).
Labour supply growth has been the greatest
contributor to economic growth
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Participation of older workers will be a key
economic driver
Labour Force Projections (millions) Illustrative
scenarios
Source Statistics Canada and HRSDC
Optimising older worker participation is the best
means to offset labour force declines
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Canadian older workers are well positioned
Participation rates for workers aged 55-64 in
selected OECD countries, 2006
Source OECD
While older workers are performing well, there is
still room for improvement
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But many older workers continue to face challenges
1. Employment supports are limited

• Job-related training declines significantly with
  age
• Employed older workers less skilled than other
  workers

Share of all employed workers with less than a
high school education, by age group, 2006
Employer supported job-related training by age,
2002
Sources Statistics Canada and HRSDC
Source Labour Force Survey
Training efforts need to be targeted towards
older workers
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But many older workers continue to face challenges
2. Employer practices matter

• Evidence of employer attitudes vis-à-vis older
  workers is outdated
• Negative perceptions about the capacities of
  older workers to adapt
• Wages and non-wage labour costs that rise more
  steeply with age than productivity.
• Workplace practices continue to adjust, for
  example
• Measures aimed at physical accommodation
• Flexible working arrangement

Employer attitudes and practices should reflect
the potential value of older workers.
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But many older workers continue to face challenges
3. Structural and financial disincentives to
continue working

• Public and private pension systems
• Interactions between various pension programs
• Flexibility of existing arrangements

Reasons to continue working ( of retirees), 2003
Source Statistics Canada
Some older workers wish to continue working
longer, but institutional barriers to work
persist
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But many older workers continue to face challenges
4. Unemployed older workers are at a
disadvantage

• Older workers are disproportionately employed in
  traditional sectors
• Displaced older workers in declining sectors have
  lower levels of education

Employment shares of workers aged 55-64, 2006
National average (all industries) 12.2
Less mobile older workers could be
disproportionately affected
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But many older workers continue to face challenges
4. Unemployed older workers are at a
disadvantage

• Older job seekers are under-represented in
  employment assistance programs

Participants in EBSM Skills Development Programs
(06/07), as a share of workers experiencing
unemployment in 2006
Sources Statistics Canada and HRSDC
Unemployed older workers receive less employment
support
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The OECD has set the stage Giving (older)
Canadians more opportunity to remain in the
workforce longer will benefit both the economy
and the workers themselves

• The OECD set out a three-pillared approach for an
  older worker strategy

• Strengthen the employability of older workers
• Set in motion workplace-based initiatives
• Provide more flexible work to retirement
  transitions and remove disincentives to continue
  working
• Another component could be
• Address vulnerable older worker challenges, e.g.
  high risk of layoff in single-industry towns

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• Strengthen the employability of older workers.
• Ensuring older workers have up-to-date skills and
  good access to employment services will
  significantly enhance employment prospects
• International examples
• New Deal 50 (UK) Targeted approach to
  employability, but poor evaluation mechanism and
  low take-up of training grant
• Return to Work Supplement (Austria) Explicit
  (transparent) example of return to work
  supplement, but occurs late in the unemployment
  stage (i.e. after 12 months)
• Competency Reform (Norway) Good example of
  right to study leave for adults (time and
  loans)

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• Set in motion workplace-based initiatives
• Employer practices that recognize the demographic
  changes underway
• International examples
• Reduced social security contributions (various
  OECD countries)
• Spain employer contributions reduced for
  workers aged 60 who have five years of seniority
  and for newly hired workers aged 45
• Norway employer contributions reduced by 4
  percentage points (i.e. from 12.8 to 8.8) for
  all older workers aged 62
• Italy employers exempt from contributions for
  one year after hiring older workers
• Allocating time to train
• Right to train (France) for employees with over
  12 months service, credit of 20 hours per year
  worked.
• Employer Training Pilots (UK) wage compensation
  (up to 150) to employers offering paid time off
  for low-skilled employees to train.

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• Provide more flexible work to retirement
  transitions and remove disincentives to continue
  working
• Create an environment that gives workers a real
  choice in making their labour market decisions
• Normally part of a broader strategy to address
  population ageing pressures
• International examples
• Finland the part-time pension entitles workers
  aged 56 and over to 50 of the income loss due to
  a reduction in working time, paid through the
  pension system. to improve employment
  opportunities.
• Sweden workers are permitted to draw a portion
  of their pension early while still working

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• Address vulnerable older worker challenges, e.g.
  high risk of layoff in single-industry towns.
• Needs of older workers in adjusting industries
  must be placed in the context of broader labour
  market and economic adjustment/regional
  development strategy
• International examples
• Trade Adjustment Assistance, Target Group
  Benefits for Older Workers (US) Reemployment
  benefits, income support benefits for trade
  displaced workers. Earnings supplement available
  to workers age 50, for whom retraining may not
  be suitable
• European Globalisation Adjustment Fund (EGF) The
  European Union recently introduced a targeted
  initiative for workers (not targetted to older
  workers) who have been made redundant as a result
  of trade liberalization

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Coherence

• range of measures are likely to be more
  effective if taken as part of a coordinated or
  complementary federal/provincial/territorial wide
  strategies.. (OECD Aging and Employment Canada)
• Finland National Program on Ageing Workers (45)
  Three phased program to improve employment
  opportunities.
• National Strategy for an Ageing Australia to
  promote awareness of ageing, advise on short-and
  long-term policy.