« Ageing and Employment Policies A g e Canada in g a In the face of rapid population ageing and the trend towards early retirement, there is a need n d to promote better employment opportunities for older people. Much has been said about E m the need for reform of old-age pensions and early retirement schemes but this may not be p Ageing and Employment sufficient to raise employment rates for older people significantly or to reduce the future risk lo of labour shortages. Both governments and firms will need to take active measures to adapt ym Policies wage setting to ageing workforces, to address the extent to which other welfare schemes e n act as pathways to early retirement, to tackle age discrimination and to improve the job skills t P and working conditions of older workers. In addition, older workers will need to change their o own attitudes towards working longer and acquiring new skills. Little is known about what lic countries have been doing or should be doing in these areas. ies Canada This report on Canada is part of a series of 21 OECD country reports that are intended to fill C this gap. Each report contains a survey of the main barriers to employment for older workers, a an assessment of the adequacy and effectiveness of existing measures to overcome these n a barriers and a set of policy recommendations for further action by the public authorities and d a Vieillissement et politiques social partners. de l’emploi This report is based on the proceedings of a seminar and is published in English only. However, a French translation of the Executive Summary and Recommendations has been included in this volume. In the same series: Australia Luxembourg Austria Netherlands Belgique Norway Czech Republic Spain Finland Suisse France Sweden Italy United Kingdom Japan United States Korea The full text of this book is available on line via these links: http://www.sourceoecd.org/employment/9264012443 http://www.sourceoecd.org/finance/9264012443 http://www.sourceoecd.org/socialissues/9264012443 Those with access to all OECD books on line should use this link: http://www.sourceoecd.org/9264012443 SourceOECD is the OECD’s online library of books, periodicals and statistical databases. For more information about this award-winning service and free trials ask your librarian, or write to us at [email protected]. www.oecd.org -:HSTCQE=UVWYY]: ISBN 92-64-01244-3 81 2005 16 1 P Fx Titre A.fm Page 1 Wednesday, August 10, 2005 1:16 PM (cid:0)(cid:1)(cid:2)(cid:3)(cid:4)(cid:1)(cid:5)(cid:6)(cid:4)(cid:7)(cid:5)(cid:8)(cid:9)(cid:10)(cid:11)(cid:12)(cid:13)(cid:9)(cid:2)(cid:4)(cid:14)(cid:5)(cid:15)(cid:12)(cid:11)(cid:3)(cid:16)(cid:3)(cid:2)(cid:17) (cid:0)(cid:1)(cid:2)(cid:3)(cid:2)(cid:4)(cid:4)(cid:2)(cid:5)(cid:5)(cid:3)(cid:6)(cid:3)(cid:7)(cid:8)(cid:9)(cid:3)(cid:8)(cid:9)(cid:10)(cid:11)(cid:4)(cid:2)(cid:8)(cid:2)(cid:12)(cid:13)(cid:3)(cid:5)(cid:9)(cid:14)(cid:3)(cid:9)(cid:4)(cid:15)(cid:3)(cid:6)(cid:10)(cid:4)(cid:11)(cid:2)(cid:16) (cid:0)(cid:1)(cid:2)(cid:1)(cid:3)(cid:1) 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(cid:23)(cid:5)(cid:5)(cid:17)(cid:10)(cid:8)(cid:14)(cid:9)(cid:10)(cid:1)(cid:11)(cid:15)(cid:2)(cid:15)(cid:19)(cid:1)(cid:7)(cid:17)(cid:6)(cid:2)(cid:20)(cid:4)(cid:2)(cid:15)(cid:4)(cid:11)(cid:9)(cid:2)(cid:9)(cid:1)(cid:2)(cid:24)(cid:25)(cid:26)(cid:27)(cid:2)(cid:28)(cid:7)(cid:20)(cid:17)(cid:10)(cid:15)(cid:19)(cid:10)(cid:11)(cid:29)(cid:30)(cid:2)(cid:0)(cid:1)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:10)(cid:11)(cid:7)(cid:0)(cid:2)(cid:2)(cid:1)(cid:3)(cid:2)(cid:20)(cid:13)(cid:2)(cid:18)(cid:14)(cid:31)(cid:2) !!(cid:2)"#(cid:2)$%(cid:2)&$(cid:2)"!(cid:2)’"(cid:22)(cid:2)(cid:28)(cid:4)(cid:3)(cid:16)(cid:10)(cid:15)(cid:15)(cid:10)(cid:1)(cid:11)(cid:2)(cid:9)(cid:1)(cid:2)(cid:5)(cid:19)(cid:1)(cid:9)(cid:1)(cid:8)(cid:1)(cid:5)(cid:13)(cid:2)(cid:14) 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,(cid:3)(cid:14)(cid:11)(cid:6)(cid:15)-(cid:23)(cid:7)(cid:29)(cid:7)(cid:15)(cid:9)(cid:10)(cid:11)(cid:15)(cid:12)(cid:2).%++/(cid:2)(cid:28)(cid:14)(cid:3)(cid:10)(cid:15)(cid:12)(cid:2)0(cid:3)(cid:14)(cid:11)(cid:8)(cid:4)(cid:2) (cid:9)(cid:7)(cid:12)(cid:4)(cid:13)(cid:9)(cid:4)(cid:6)(cid:9)(cid:14)(cid:9)(cid:7)(cid:15)(cid:1)(cid:8)(cid:5)(cid:11)(cid:9)(cid:7)(cid:16)#(cid:22) – 3 FOREWORD FOREWORD Older people offer tremendous potential value to businesses, the economy and society. Unfortunately, they often represent an untapped and discriminated-against resource, as many public policy measures and private workplace practices pose serious barriers to work, both paid and unpaid. Many of these policies and practices are relics from a bygone era. There is a need to look beyond traditional stereotypes about ageing in order to benefit from the growing numbers of older citizens, many of whom would, in fact, choose to work for longer given appropriate policies and workplace practices. The OECD has reported extensively on public pension and early retirement systems and the need for reforms of these systems to cope with some of the challenges posed by population ageing. However, these reforms will not be enough to encourage later retirement and to reduce the risk of future labour shortages. Measures are also required to adapt wage-setting practices to greying workforces, to tackle age discrimination and negative attitudes to working at an older age, to improve job skills of older people and their working conditions, and to better “activate” older job seekers. Relatively little is known about what countries have been, or should be doing, in these areas. Therefore, in spring 2001, the OECD Employment, Labour and Social Affairs Committee decided to carry out a thematic review of policies to improve labour market prospects for older workers covering both supply-side and demand-side aspects. For the purpose of this thematic review, it was decided to define older workers as all workers aged 50 and over. The age of 50 is not meant to be a watershed in and of itself in terms of defining who is old and who is not. Perceptions about being old are inherently subjective and only loosely connected with chronological age. However, in many countries, the age of 50 marks the beginning of a decline in participation rates by age. Moreover, to facilitate international comparisons, it is preferable to refer to the same age group for all countries. Thus, all references to “older workers” in this report should be taken as shorthand for workers aged 50 and over (or in some cases, because of data constraints, workers aged 50 to 64), and should not be seen as implying that all workers in this group are “old” per se. AGEING AND EMPLOYMENT POLICIES: CANADA – ISBN-92-64-01244-3 © OECD 2005 4 – FOREWORD This report on Canada is one in a series of 21 OECD country reports that will be published as part of the older worker thematic review, which has been developed by Raymond Torres. It has been prepared by Steven Tobin under the supervision of Mark Keese (team leader). Technical and statistical assistance was provided by Sylvie Cimper and Clarisse Legendre. A draft of the report was discussed at a seminar on “Policies to Improve Labour Market Outcomes for Older Workers” in Ottawa on 30 March 2005, which was organised by Human Resources and Skill Development Canada. The final report incorporates comments from representatives of the national authorities, the social partners and non-governmental organisations, as well as academics. * * * This report is based on the proceedings of a seminar and is published in English only. However, a French translation of the Executive Summary and Recommendations has been included in this volume (see p. 19). * * * AGEING AND EMPLOYMENT POLICIES: CANADA – ISBN-92-64-01244-3 © OECD 2005 – 5 TABLE OF CONTENTS TABLE OF CONTENTS EXECUTIVE SUMMARY AND RECOMMENDATIONS............................9 The challenge ahead......................................................................................9 Recent reforms............................................................................................10 Directions for reform..................................................................................11 Recommendations for reform......................................................................12 RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS...................................19 INTRODUCTION..........................................................................................31 Chapter 1. THE CHALLENGE AHEAD.....................................................33 1. The demographic realities................................................................33 2. Potential economic and social repercussions of ageing.....................35 3. Potential solutions to the demographic challenges............................37 Chapter 2. THE LABOUR MARKET SITUATION OF OLDER WORKERS...43 1. Key issue: optimising labour supply of older workers......................43 2. Employment, job characteristics and working arrangements.............49 3. Non-employment among older workers............................................54 Chapter 3. INCOME SUPPORT AND WORK INCENTIVES FOR OLDER PEOPLE.......................................................................63 1. Canada’s pension system..................................................................63 2. Other elements of Canada’s social security system...........................67 3. Social security system and work incentives......................................69 Chapter 4. ENCOURAGING EMPLOYERS TO HIRE AND RETAIN OLDER WORKERS....................................................83 1. Employer practices and older workers..............................................83 2. Barriers to employing and retaining older workers...........................87 3. Measures to encourage the hiring and retention of older workers.....96 AGEING AND EMPLOYMENT POLICIES: CANADA – ISBN-92-64-01244-3 © OECD 2005 6 – TABLE OF CONTENTS Chapter 5. STRENGTHENING OLDER WORKERS’ EMPLOYABILITY.103 1. Education and training levels of older workers...............................103 2. Helping older workers to return to employment..............................114 3. Measures to improve the employability of older workers...............123 Chapter 6. ENSURING POLICIES ARE COMPREHENSIVE AND COHERENT.............................................................................129 1. Policy coordination and coherency.................................................129 2. Directions for policy.......................................................................130 BIBLIOGRAPHY........................................................................................133 List of Boxes Box 3.1. Private pensions and savings plans in Canada..............................66 Box 3.2. EI benefit programmes in Canada in 2004...................................67 Box 3.3. CPP Disability Vocational Rehabilitation in Canada...................79 Box 4.1. Some examples of promoting best practices and age diversity..........98 Box 4.2. Measuring working conditions....................................................99 Box 4.3. The National Programme on Ageing Workers in Finland..........101 Box 5.1. Some federal government-supported literacy initiatives............107 Box 5.2. Employment Benefits and Support Measures in Canada............115 Box 5.3. Approaches to the Older Workers Pilot Projects Initiative.........119 List of Figures Figure 1.1. Projected trends in dependency ratios, 2000-50...........................35 Figure 1.2. Change in labour force growth in OECD countries under the “constant” scenario, 1950-2000, 2000-50.....................38 Figure 1.3. Labour force growth scenarios in Canada, 1978-2050.................39 Figure 1.4. Average effective retirement age in Canada, 1966-2004..............40 Figure 1.5. Average effective retirement age in OECD countries, 1999-2004....41 Figure 2.1. Labour force participation rates by gender and age in OECD countries, 2004................................................................44 Figure 2.2. Labour force participation rate by gender and single year of age in Canada, 2004..............................................45 Figure 2.3. Labour force participation rates by gender, age and province in Canada, 2003...............................................................................47 Figure 2.4. Labour force participation rates by immigration, gender and age in Canada, 2001...............................................................................48 AGEING AND EMPLOYMENT POLICIES: CANADA – ISBN-92-64-01244-3 © OECD 2005 – 7 TABLE OF CONTENTS Figure 2.5. Labour force participation rates by period of immigration, gender and age in Canada, 2001..................................................48 Figure 2.6. Full-time employment/population ratios by gender and age in Canada, 1980-2004......................................................................50 Figure 2.7. Incidence and growth in part-time employment by age and gender in Canada, 2004..................................................51 Figure 2.8. Part-time employment by gender and age in selected OECD countries, 2004...................................................52 Figure 2.9. Employment growth by occupation, age and gender, 1993-2003...................................................................................55 Figure 2.10. Employment by occupation and gender for older workers in Canada, 2003....................................................56 Figure 2.11. Unemployment rates by gender and age in Canada, 1976-2004.....58 Figure 2.12. Unemployment rates among older workers (50-64) by gender and province in Canada, 2003..........................................59 Figure 3.1. Retirement rate by gender and single year of age in Canada and the United States, 2002-04.......................................70 Figure 3.2. Share of “early” CPP recipients by gender, 1998 and 2001..........73 Figure 3.3. “Early” female OAS recipients, 2003..........................................77 Figure 3.4. Inflow into CPP disability by age, 1993-2003.............................78 Figure 3.5. Stock of CPP disability among older workers by age, 1993-2003.....78 Figure 4.1. Retention rates over five years by gender and age in selected OECD countries, 1999-2004..........................................86 Figure 4.2. EPL strictness and the hiring rate and tenure of older workers in selected OECD countries..................................88 Figure 4.3. Age-earnings profiles of full-time workers by gender in selected OECD countries, 2002...................................................93 Figure 4.4. Incidence of absence for employees by full/part week, gender, age and reason in Canada, 2003......................................94 Figure 4.5. Share of prime-age (25-49) and older workers (50-64) working more than 50 hours per week in Canada, 2003...............95 Figure 5.1. Educational attainment by gender, age and province, 2003........105 Figure 5.2. Incidence of job-related training by gender and age in Canada, 2002.............................................................................110 Figure 5.3. Incidence of job-related training by age and education in Canada, 2002.............................................................................111 Figure 5.4. Difference in the incidence of job-related training between prime-age (25-49) and older (50-64) workers by gender and province, 2002.........................................................112 AGEING AND EMPLOYMENT POLICIES: CANADA – ISBN-92-64-01244-3 © OECD 2005 8 – TABLE OF CONTENTS Figure 5.5. Participation in Employment Benefits and Support Measures by gender and age, 2000 and 2003..............................................117 Figure 5.6. Employment status by age in Canada, 2003...............................121 Figure 5.7. Public expenditure on active labour market programmes in selected OECD countries, 2001/02............................................126 List of Tables Table 2.1. Distribution of usual weekly hours worked by older workers (50+) in selected OECD countries, 2004...............53 Table 2.2. Percentage share of inactive persons unable to work by gender and age, 2003...................................................................54 Table 2.3. Desire to work among those able to work by gender and age, 2003...................................................................57 Table 2.4. Distribution of unemployment duration by gender and age, 2003.....58 Table 2.5. Reasons why unemployed workers left their last job in Canada, 2003...............................................................................60 Table 2.6. Reasons why inactive persons left their last job in Canada, 2003...............................................................................60 Table 3.1. Maximum OAS programme benefits by status, 2004...................64 Table 3.2. Incidence and average duration of EI sickness benefits by gender and age, 2002...................................................................81 Table 4.1. Relative hiring intensity by age in selected OECD countries, 2004................................................................84 Table 4.2. Relative hiring intensity by gender and age in Canada, 2003.......85 Table 5.1. Labour market outcomes and educational attainment by gender and age in Canada, 2003................................................104 Table 5.2. Share of self-employed in Canada by gender and age, 1998 and 2003...........................................................................121 AGEING AND EMPLOYMENT POLICIES: CANADA – ISBN-92-64-01244-3 © OECD 2005 – 9 EXECUTIVE SUMMARY AND RECOMMENDATIONS EXECUTIVE SUMMARY AND RECOMMENDATIONS The challenge ahead Population ageing is occurring less rapidly in Canada than in many other OECD countries. This is partly the result of a high rate of immigration relative to the OECD average and a total fertility rate that is not projected to fall as low as in Japan or some southern European countries. Nevertheless, the proportion of the population aged 65 and over to the working-age population (20-64) is expected to rise from 20% in 2004 to just over 45% in 2050. Consequently, there is a risk that a combination of slower labour force growth and a sharp rise in the number of workers exiting the workforce (as the baby-boom generation retires) could affect economic growth over the next few decades. In order to minimise this risk, the challenge Canada faces is to remove barriers to labour force participation, especially with respect to the growing cohorts of older people. Policies that help older workers to remain longer in the work force will not only be of benefit to society as a whole but also to many older workers themselves for whom early exit from the workforce may result in social exclusion and reduced opportunities to ensure an adequate income in retirement. In some respects, Canada is well placed to meet this challenge. First, past reform has strengthened the financial sustainability of pensions, although other age-related expenditures will also be placing pressure on public finances. Second, the labour market situation of older workers has improved considerably in recent years. Between 1994 and 2004, the participation rate of older men and women aged 50-64 has increased by around 5 and 13 percentage points, respectively – well above the average increase across OECD countries. Third, both younger and older Canadians are well educated – among OECD countries, Canada has the highest proportion of prime-age people with tertiary qualifications and, for older people, the second highest proportion. And, life expectancy and health outcomes more generally are expected to continue to improve over the coming decades, opening up greater opportunities for older Canadians to both extend their working lives and enjoy more years of retirement. AGEING AND EMPLOYMENT POLICIES: CANADA – ISBN-92-64-01244-3 © OECD 2005