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

1  Diagnostique  Older workers: challenges  OECD suggested path forward  International experience Toward an older worker strategy: Ensuring economic growth for the 21st Century

2 Population aging is accelerating in varying degrees across the country Source: Statistics Canada and OECD The age structure of Canada’s population is changing… Dependency Ratio (Population 65+/Population 15-64)

3 Source: OECD … and Canadians are living longer, healthier lives… Life expectancy, expected years in retirement and effective retirement 1970 and 2005 Aging combined with more years in retirement brings forth many challenges Women Males

4 Labour force growth Expected Labour force growth * Source: OECD Note*: Other OECD countries’ forecasts refer to (Source: OECD and HRSDC). Labour force growth will slow considerably… Labour supply growth has been the greatest contributor to economic growth

5 Status quo Raising participation rates among workers aged to national average Raising immigration to 1% of population Labour Force Projections (millions) Illustrative scenarios Participation of older workers will be a key economic driver… Optimising older worker participation is the best means to offset labour force declines Source: Statistics Canada and HRSDC

6 Canadian older workers are well positioned…… Participation rates for workers aged in selected OECD countries, 2006 Source: OECD While older workers are performing well, there is still room for improvement

7 1. Employment supports are limited  Job-related training declines significantly with age  Employed older workers less skilled than other workers But many older workers continue to face challenges Training efforts need to be targeted towards older workers Sources: Statistics Canada and HRSDC Employer supported job-related training by age, 2002 Share of all employed workers with less than a high school education, by age group, 2006 Source: Labour Force Survey

8 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 Employer practices matter  Evidence of employer attitudes vis-à-vis older workers is outdated –Negative perceptions about the capacities of older workers to adapt –Wages and non-wage labour costs that rise more steeply with age than productivity.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 But many older workers continue to face challenges Employer attitudes and practices should reflect the potential value of older workers.

9 3. Structural and financial disincentives to continue working  Public and private pension systems  Interactions between various pension programs  Flexibility of existing arrangements But many older workers continue to face challenges Some older workers wish to continue working longer, but institutional barriers to work persist Reasons to continue working (% of retirees), 2003 Source: Statistics Canada

10 4. Unemployed older workers are at a disadvantage National average (all industries) 12.2%  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 But many older workers continue to face challenges Less mobile older workers could be disproportionately affected

11 4. Unemployed older workers are at a disadvantage  Older job seekers are under-represented in employment assistance programs Sources: Statistics Canada and HRSDC Participants in EBSM Skills Development Programs (06/07), as a share of workers experiencing unemployment in 2006 But many older workers continue to face challenges Unemployed older workers receive less employment support

12 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: 1.Strengthen the employability of older workers 2.Set in motion workplace-based initiatives 3.Provide more flexible work to retirement transitions and remove disincentives to continue working Another component could be: 4.Address vulnerable older worker challenges, e.g. high risk of layoff in single- industry towns

13 1.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)

14 2.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.

15 3.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

16 4.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

17 “… 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. Coherence