:
Mr. Chair, thank you for inviting Human Resources and Skills Development to today's hearing. We are very pleased to be here today to discuss the labour market situation of older workers.
[English]
Older Canadians, generally understood to be those 55 and over, are an important source of labour supply across Canada. In 2012, nearly one in five individuals who were working or unemployed were age 55 and older, which is up from one in nine in 2002. According to Statistics Canada, it is expected that by 2021 about one in four of these individuals will be age 55 and over.
The labour market performance of older Canadians has been relatively strong over the past decade as they experienced low levels of unemployment and the greatest increases in participation and employment when compared to other age groups. For example, the unemployment rate of older adults ages 55 to 64 was 6.3% in 2012, which compares favourably to that of youth ages 15 to 24, at 14.3%. It is similar to that of prime-age workers, ages 25 to 54, at 6.0%.
The employment rate for older adults rose about 10% between 2002 and 2012, and that of seniors almost doubled from 6.5% in 2002 to 12.0% in 2012. Between 2002 and 2012, the average age of retirement in Canada increased from age 61 to 63. This is expected to continue to increase as Canadians are delaying retirement later into their lives for reasons such as better health, later entry into the labour market with higher levels of education, and lack of retirement savings.
Some older Canadians face challenges when trying to find work. For example, once unemployed, older adults are more likely to become long-term unemployed. If older workers do find re-employment after suffering a job displacement such as a layoff, company downsizing, or a plant closure, many of these workers report earning up to 25% less in their new job compared to the previous job. Displaced older workers in small communities often face significant barriers to re-employment, especially in remote areas where there is limited economic infrastructure to support employment transitions and/or areas that were heavily reliant on traditional industries.
Promoting the continued participation of older Canadians to sustain our supply of labour is increasingly important, especially given employers in some sectors are reporting skilled labour shortages and that the pace at which Canada's labour force grows will slow to less than 1% over the next decade.
[Translation]
Recognizing that older workers' skill and experience are important for our economy, the Government of Canada has been committed to reducing barriers to employment among older Canadians.
[English]
Several programs have been implemented to directly support older Canadians looking for work. For example, the targeted initiative for older workers helps unemployed older workers who live in small, vulnerable communities affected by high unemployment and/or significant downsizing stay in the labour market by providing a range of employment activities, including training. Since the launch of this initiative in 2007, $270 million has been invested in this program and more than 27,800 clients have been targeted for participation in communities across the country.
In addition to this program, ThirdQuarter provides an online job forum that makes it easier for older workers to find jobs that match their skills and helps businesses find workers with the skills they need.
To connect Canadians, including older Canadians, with jobs, the Government of Canada invests $2.7 billion annually through labour market development agreements, labour market agreements, and labour market agreements for persons with disabilities. These federal transfers are in support of labour market programming that is delivered by provinces and territories.
Economic action plan 2013 announced that the Government of Canada will transform skills training through the introduction of the Canada jobs grant through the renewal of the labour market agreements with the provinces and territories in 2014-15.
The labour market agreements will be reformed to directly connect skills training with employers and jobs for Canadians with the Canada jobs grant. The labour market development agreements will also be renegotiated to reorient training toward labour market demand.
Finally, economic action plan 2013 also announced that the labour market agreement for persons with disabilities will be reformed to better meet the employment needs of Canadian businesses and also improve the employment prospects for persons with disabilities.
In order to ensure that older Canadians can work longer, the Government of Canada eliminated mandatory retirement for federally regulated employees in 2011. The government also removed disincentives to work and introduced flexibility to accommodate differences in work-to-retirement transitions through the pension system.
In 2008 the annual guaranteed income supplement earnings exemption was increased from $500 to $3,500, allowing low-income seniors who work to retain more of their GIS benefits before the benefit reduction applies.
Recent changes to the old age security program announced in budget 2012 will give workers the choice of deferring receipt of OAS pension for up to five years in order to receive a higher annual pension benefit. In addition, in 2009 the government reformed the Canada pension plan to better reflect how Canadians choose to live, work, and retire.
A number of changes are being phased in to provide greater flexibility for older workers, especially those who seek to combine income from employment and a pension. As a result, people are no longer required to reduce their earnings or stop working in order to start receiving an early CPP retirement pension. People who delay CPP receipt past the age of 65 will now receive a larger increase to their benefits. The post-retirement benefit was created, allowing working CPP retirement pension beneficiaries under the age of 70 to continue to contribute to the CPP in order to increase their retirement income.
Finally, the Government of Canada introduced changes to the tax rules to allow phased retirement arrangements under certain workplace pensions.
[Translation]
Recent Government of Canada consultations have revealed that older workers are valued by employers.
HRSDC continues to study measures that can help address labour market challenges faced by older Canadians and increase their labour market participation and employment.
The federal government cannot act alone, as it shares responsibility for labour market programs involving training with the provinces and territories.
In addition, the workplace also has a role to play. For example, the 2008 Survey of Older Workers found that flexible work arrangements could create an incentive for older workers to continue to work longer.
Additionally, the National Seniors Council, an advisory council established by the federal government, has also led consultations on the issue. Since 2011, the council has consulted a number of stakeholders on how to support the workforce participation and continued employment of older Canadians. These consultations highlighted the importance of engaging employers to promote the design of workplace policies and practices that meet the needs of an aging workforce.
We look forward to seeing the findings of the committee's study and the policy recommendations that will result.
Thank you.
:
Thank you, and I thank the witnesses very much for being with us this morning.
I have a number of questions in a bunch of different directions. Let me start first by making an observation.
It seems to me that when we're talking about older workers, we may want to divide our conversation into two separate groups of older workers. One, I would suggest, would be those who are ages 55 to 64 who, if they're losing employment, have a dramatically more difficult time in finding new employment or accessing skills training. The other would be perhaps those who are 65 and over who may well be seeking employment simply because they can't make ends meet on their public, private, or workplace pensions.
Let me start by asking a question about your presentation. On page 3 of the written document which is before us, the bullet reads, “The Government is also implementing measures that help promote the continued labour force participation of older Canadians by removing disincentives to work...”.
What disincentives to work are you removing?
:
Thank you very much, Mr. Chair.
Thank you, Mr. Daniel, for letting me grab your spot. I have a couple of specific questions I want to ask.
I agree with Ms. Charlton. In this study, we're going to look at two different types of older workers. We're going to look at individuals 55 to 64 who have lost a job and want and need to keep working. What are the challenges around that and what we can do for them?
My second question is, what about people who want to continue to work beyond 65 into their 70s? I'll give you the example of one of my constituents in a minute.
I want to start with this example: I'm 55 years old. I've lost my job. I walk into a Service Canada office to file my EI claim. Beyond processing the actual claim...I may have worked for a company for 25 years, but something has happened—they've gone out of business, or downsized, whatever—I've lost this job due to no fault of my own.
What else are we presently doing to help that individual find a job, or transition, or retrain, or whatever, either by Service Canada delivering that directly, or by partnering with the provinces, if we've provided funding to the provinces, to run employment centres that are working with older workers, specifically that 55 to 65 age range?
These are people who want to and need to continue to work for 10 more years, and may have to transition to finish. Walk me through what we do for that 55-year-old Canadian who walks into our offices to make that claim. What else do we do to help them become re-employed?
:
Okay. That's good. That's what I wanted to know. When I have people coming into my office and this is an issue, I certainly want to be able to tell them what we are doing. I'm sure we could do more, and that's going to be part of this study, but it's good to know programming is there and there are options for individuals in this category to pursue, so I appreciate that answer.
Let's move to the second stage. A gentleman in my riding who's 70 years old certainly wanted to retire and certainly could retire, but the company he's worked for has asked him to stay and work two days a week. They want his expertise; he's a quantity surveyor. They're finding it very difficult to recruit a new person into that role due to the lack of people with that particular skills training within this company in Mississauga.
He believes he's being penalized for continuing to work, meaning when he adds up CPP, OAS, and the other entitlements he's getting, plus getting paid two days a week at a skill level job that's fairly well paid, even though he's only working two days a week, his view is there's really no incentive for him to keep working. The employer wants to keep him because they need him, and he would love to work two days a week. He doesn't want to work full time, but he's happy to go in two days a week. He wants to golf on Thursday, but he doesn't mind going to work on Monday and Tuesday.
His line to me was he believes the system has set up a disincentive for him to continue to work at 70.
Have we looked at scenarios like that? I realize that involves the Department of Finance too, and I understand it's how income taxes are assessed, I understand all that. I think there are going to be more and more Canadians who want to do this, who want to keep working a couple of days a week, for whatever reason. It could be financial, but it could just be they want to do that.
I'm concerned that the way the system is set up is we've got a disincentive for older workers to do that. Have we looked at that at all and made sure we're not creating a disincentive for older workers to continue to work, even if it is part time?
:
Yes, we do take this into consideration. We had a number of consultations with Canadians. There was a panel on older workers in 2007. A report was released in 2008. We did some consultations, round tables with employers and employees across the country in 2011.
We hear what you brought to the committee, but what comes out in terms of the decision to retire, the first reason that comes up is whether people are healthy or not. Their health is the crucial element in whether they want to continue working or not. If they are healthy, then the financial considerations in terms of readiness to retire come second. The third element in terms of their decision has to do with the quality of the work experience.
When we ask them what it would take for them to stay longer, the main thing is flexibility in the workplace. As an example, working just a few days a week is what they seek. They're not thinking of the financial aspect first. Many will say that if they're provided with flexibility, they would like to make a contribution.
When it comes to finances, as I mentioned in my introductory remarks, the guaranteed income supplement used to allow workers to keep the first $500 they earned. This has been increased to $3,500. This is another element that helps with the decision to stay longer in the labour market, but the financial reason is not usually the first reason.
:
What I could say is that workers would like to find a job at the same wage. Employers will pay the prevailing wages, according to the market. If someone is displaced and has to upgrade their skills—this is just something that we observe—they are not going to be able to earn as much.
What you're raising, I think, calls into question the role of government. Where or how far should the government go in intervening in this area? The labour market allocates workers to where they're needed. A huge emphasis has been placed on improving the information we provide to workers so that they can quickly connect to the jobs that exist and that correspond to their skills.
The job alert system, which the department has improved, is sending messages every day to workers early in their process, so that they quickly find a job and get back to work. We know that the longer they stay unemployed, the more difficult it will be for them, because they're losing their skills as they are unemployed. We want to avoid that and make sure....
Perhaps what I can offer to you is that connecting people quickly to jobs is a way to mitigate the loss of skills and loss of earnings capacity. If they find a job quickly, employers are able to grow their businesses and these workers are able to continue exercising their profession, using their skills, as opposed to losing their skills.
:
I sense we're getting into the area that I made some comments about earlier.
As I look at the motion of what we're setting, I'll read it out loud and see where it takes us. It says:
The Committee then begin a new study entitled: “Engaging Experience: Opportunities for Older Persons in the Workforce”;
That this study focus on employment opportunities for older persons and the supports available to them through the federal government....
In the introduction of the briefing book done by the Library of Parliament, it says:
....the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities agreed to begin a study of the economic opportunities available to older persons in the workforce, the obstacles preventing older workers from participating more fully in the labour market, and the federal support available to increase opportunities
Those are the specific outlines of the study. I suppose if you increase the age from 65 to 67, by that very nature you're attracting a certain measure of older workers to the workforce that may not have otherwise been there. But that is ancillary to the main object of our study. I don't think it is appropriate to get into the future planning as it may relate many years hence, in terms of raising the age with respect to receiving old age security and the impact it may have on the workforce.
That's my thinking on this subject. Unless somebody wishes to challenge it, that is what I would rule, so we're not going to ask for models, stats, or information with respect to that.
After the 2011 election, I myself hired people in my riding who were over 55 years old on average. It works well for me. From time to time, I have to deal with some stubbornness, given that they have a lot of experience, but that very experience sometimes leads to better decisions.
What I am sure I did not do was to bring about an overall loss of 25% in their income when they changed jobs. What bothers me most is that all the statistics look very much like what we see on the ground. For example, when Stryker, the manufacturer of hospital beds, closed its doors, people 55 and older ended up working in service industries at inevitably lower salaries. That is what we are seeing on the ground all the time.
Do you have statistics on the specific impact of that situation? I mean the loss of income and purchasing power and the requirement to work longer in order to have the means to be able to retire.
Do you have statistics on that generation of people who have lost their jobs in manufacturing and are now working at lower-paid jobs in the service sector?
:
Fine. I understand. I see that no study focuses specifically on that aspect. So it will be less interesting, in my opinion.
In terms of the targeted initiative for older workers, it is supposed to help workers from 55 to 64 years of age by providing a range of employment-oriented activities, such as training that is tailored to meet their needs.
In my riding, the Centre d'aide et de recherche d'emploi Montmagny-L'Islet has developed the Cible-55 program, which is supported in large part by the federal government. They do not provide specialized training. They do not teach welders how to use new computerized welding equipment, for example. The employees at the organization sit down with people who may not have prepared a resumé or gone to an interview in 25 years. So they offer to go through it all with them so that it will not be so hard later.
They get annual funding that is not indexed and they live under the constant threat of being told that their jobs will not exist next year. I do not understand that. People who lose their jobs after 25 or 30 years at the same place need someone to support them as they return to the workforce, by showing them, for example, how to write a resumé and how to express themselves in an interview.
Given that the need is not going to go away, why is the organization not offered three-year funding, at least? It could then have some assurance that it would be able to operate properly.
:
The program we have for older workers is a general program. It's targeted to older workers, but it's for all older workers.
When it comes to statistics about the characteristics of the older workers who may be unemployed, looking at my notes I see I do have a lot of statistics. But in order to be helpful to the committee, what I can say is that we know that in 2012, 11.3% of the unemployed among older adults, people age 55 to 64, were long-term unemployed. I think that points to an issue. When you become unemployed, that's where the problem starts, and a number of those will remain unemployed for a long period of time.
The unemployed older workers, on average, will spend 29 weeks unemployed, which is way above the average for Canadians in general. We find that a good share of those who lose their jobs do so due to a displacement, for instance, a plant closure, bankruptcy, or a layoff. Those people who are hit hard by something that they didn't see coming will be vulnerable. They need to redirect their efforts to find a job, and sometimes they need to upgrade their skills.