Proceedings of the Special Senate Committee on Aging
Issue 6 - Evidence
OTTAWA, Monday, March 26, 2007
The Special Senate Committee on Aging met this day at 12:33 p.m. to examine and report upon the implications of an aging society in Canada.
Senator Sharon Carstairs (Chairman) in the chair.
[English]
The Chairman: Welcome to this meeting of the Special Senate Committee on Aging, which is examining the implications of an aging society in Canada. We have organized two panels to help us gain an overview of the key issues of the following themes: older workers, labour market, retirement patterns and retirement flexibility.
To help the committee better understand these issues, we have with us today Leroy Stone, Associate Director General, Unpaid Work Analysis, Statistics Canada, and editor of New Frontiers of Research on Retirement, which he has brought to us today. Danielle Zietsma, Senior Economist, Labour Statistics Division, Statistics Canada, is with Mr. Stone to answer questions but she will not be making a formal presentation.
We will then hear from Paul Darby, Deputy Chief Economist of the Conference Board of Canada, who will focus on the determinants of the retirement decision. Finally, Rock Lefebvre, Vice-President, Research and Standards, Certified General Accountants Association of Canada, CGA, will present the CGA report Growing Up: The Social and Economic Implications of an Aging Population, of which we have a copy.
We would appreciate if you could keep your opening statements brief, following which we will ask questions.
Leroy Stone, Associate Director General, Unpaid Work Analysis, Statistics Canada: I am honoured to be invited to participate in the work of your committee. Indeed, this occasion brings back memories of my presentation to the Croll committee — the Special Senate Committee on Retirement Age Policies — in the late 1970s.
Your document entitled Embracing the Challenge of Aging is impressive and helpful. Because it marks the end of phase one of your work, I have tried to craft some materials that, hopefully, will help you move forward with regard to phase two.
My brief deals with the field of financial security and retirement. The written brief covers six related topics, and what I will say today deals with the last three.
The key points from the first three topics are as follows:
First, I recommend you revisit the subject of labour market-related implications of population aging to cover topics that merit further attention. Suppose, for example, there are enough workers in total but not enough of the kind needed to push labour productivity. As another example, even if we have a workforce that seems large enough in total, what about occupational and skill shortages that may develop in specific industries or regions?
Second, I recommend you revisit a number of issues that arise from the dependence of the third pillar of the retirement income system on the level of returns in the financial markets and housing prices. A notable issue here is increasing the prevalence of good knowledge and practices as regards financial management among individuals and families in Canada, given that the responsibilities for executing that management well are devolving more and more to them.
Again, in connection with the third pillar, I recommend you keep attention focused on two key population groups — first, those who rely heavily on non-standard work for their employment income and, second, older immigrants. Both groups are, and will be, gaining share in the older population.
I will now focus on the last three topics in my brief, the first being the self-employed. The self-employed comprise a major segment of older workers. A friendly climate for self-employment among older workers will facilitate the retention of their active contributions to national economic output.
In chapter 15 of New Frontiers of Research on Retirement, Dr. Hasheem Nouroz and I looked at the work-to- retirement transitions of the self-employed from a variety of angles. We used an indicator of flexibility with regard to the transition to retirement, another indicator of the propensity to return to the labour market after leaving it. On both indicators, the self-employed were distinctly higher than the wage and salary earners. They were also less subject to vulnerability in the sense of being exposed to job losses or undesirable job changes.
Furthermore, a substantial, if not overwhelming proportion of older employees — wage and salary earners — move into self-employment during the transitional years. We followed a panel from the Survey of Labour and Income Dynamics — these panels are followed for six years — and among those who began their work-to-retirement transitions early in those six years and who were employees (wage and salary earners) in the first year, about 12 per cent in the public sector moved into self-employment over the next three years and, in the private sector, about 7 per cent.
Small though these movements may be into self-employment at the older ages, they do raise questions about training and expertise in the many aspects of successful business management, as well as some issues associated with access to credit. As you may know, this is of particular interest to women entrepreneurs.
Also, at the 2005 meeting of the Canadian Association of Pre-Retirement Planners, there was testimony to the effect that the planners' clients are showing increased interest in self-employment.
These observations will take on more significance as the better educated and more activist baby boomers continue to dominate the ranks of those transiting to retirement.
Who works past the age of 65? Your theme entitled a policy approach adopts a framework that could adequately distribute productive work over the full course of life and, in this context, your text mentions specifically those who continue to work beyond the age of 65. Just over one-third of a million Canadians age 65 or older are employed or seeking work at this time. Two-thirds of these are men, and about one-third are the age of 70 or older. Among the men, more than 15 per cent have university degrees, and this is three times as high as men of the same age who are not in the labour force.
I am doing work on the question of predicting who among a group we are observing in their early sixties will move on, continuing to work past the age of 65. The preliminary results suggest that the following variables are important in explaining the propensity to work beyond the age of 65: being self-employed, having a high score on a wealth index, graduating from high school, having an occupation that is managerial or technical, and being divorced or separated.
One key lesson from this analysis, and which is echoed by American research, is that, as you get into the more aged part of the older population, the factors driving staying at work tend to be ones that are not very sensitive to policy interventions in the short run.
Finally, in connection with your theme entitled the role of the federal government, you may find it helpful to consider an educational role that goes beyond information on federal programs and services. Also of possible utility to you would be an explicit review of the new kinds of information that you and the public need. My written brief has some examples of those new kinds. This means that you may find it worthwhile to convene a special session that looks into the new kinds of observation-based information for which existing data sources provide weak support.
Rock Lefebvre, Vice-President, Research and Standards, Certified General Accountants Association of Canada: On behalf of the Certified General Accountants Association of Canada, CGA, thank you for this opportunity. After all, our own 68,000 members are affected personally and professionally by the issue we are here to discuss today. Also, important, CGA Canada has in recent years conducted research positions, including a number on pension, aging and productivity. These are complex topics that commend simultaneous considerations. Interestingly, though, the human condition and citizen well-being are central to some of the most crucial challenges in front of Canada today.
Canada, like other industrialized nations, requires systemic renewal as we strive to meet the challenges posed by increasing global competition. This necessitates a pre-emptive strategy, and it is incumbent upon our legislators to develop that strategy now, not 10 years hence. Failure to act today means a perpetual game of catch-up, a game we can only lose.
In comprehending, let alone trying to address, the challenges presented by an aging society and workforce, demographics can be daunting. While Canada's current median age is lower than the population of most of the other G8 nations, the greying of the baby boomer generation, coupled with an extended post-war decline in fertility, signals a dramatic rise in that median age. While the demographics are clearly worrisome, perhaps even frightening, they represent a challenge to which a robust society and economy can rise if we foster a less traditional mindset amongst employers, employees and governments.
Earlier this month, the Governor of the Bank of Canada, David Dodge, told the Calgary Chamber of Commerce that our strong fiscal position and low inflation rates give us an enviable flexibility to deal with whatever comes our way, but that depends on the long-term health of our economy.
In late January, the Honourable Monte Solberg, Minister of Human Resources and Social Development, told the Public Policy Forum conference a few blocks from here that baby boomers should consider postponing retirement to help Canada weather the growing labour shortage. Minister Solberg noted options such as improved training, enhanced income support, a shorter work week and stimulating immigration. The latter presents an ethical challenge. Should Canada be poaching the brightest and best needed by their own homeland to build and maintain their economies? However, since we already compete for that talent in other countries, we must continue to attract and retain those skilled workers. Can we really afford consciously to ignore this possibility?
Moreover, given what we know, is it not time to help older workers maintain employment? Intrinsically linked to the nation's productivity and adaptability, such a strategy also provides a means for persons to stay active, to retain a sense of purpose and an ability to continue to generate income for those who wish it.
More immediately, we could begin by redefining the term "older worker." There is clearly growing awareness that age is more than a number, as many senators can probably attest. While you are still subject to "mandatory retirement" at age 75, the term is finally being retired for the population at large, and Finance Minister Jim Flaherty's budget last Monday incorporated some helpful tax and pension proposals.
We must ease the stigma associated with the term "senior" and the notion that 65 years of age magically equates to withdrawal from productive life. We would not call for the diminishment of rights and benefits but would call for the removal of barriers, disincentives and discrimination perhaps unintentionally imposed. This goes beyond social programs, but we are hopeful that government policy can help to reverse some of the current public thinking around ageism and retirement.
Education and training are critical to the building of a flexible labour force. Canada must prepare for an era — many will say we have reached that era — in which most of us can expect to train and retrain throughout our working lives, adding skills or even changing career paths entirely. That said, the declining ranks of younger workers in our labour pool underscore the need to make the most of our still considerable resource of experienced and trained workers who are now in their fifties and sixties. Many evidently want to continue working past what is considered conventional retirement age. This calls for removing or at least lowering, in the short term, the innumerable legislative, regulatory, policy and fiscal hurdles. This calls also for the elimination of mandatory retirement, the indoctrination of workplace and life course flexibility, and changes in recruitment practice. Pension and benefit plans must be redesigned. Employers must put more effort into upgrading skills and hiring mature workers. CGA Canada has noted that Canadian companies are contributing 7 per cent less to workplace training than they did less than a decade ago. Mentoring programs, which used to be the backbone of any effort to bring younger workers on stream, would mean that individual intellectual capital represented by older workers is not lost.
It is not overstating the case to say that, without aggressive action across the entire spectrum of the Canadian society, our future as a trading nation could be at risk. Declining competitive and key factors have drawn down our overall productivity and underlining it all is the aforementioned weak investment in human capital.
It is not only about working and productivity. It is about sustainability. Health and social programs can be modernized by building on the pay-as-you-go system to a health account methodology, which transfers money to provinces based on the respective attributes of those jurisdictions. Presentation can be relied upon more heavily to curb attitudes and behaviour. Integrated health networks can be evolved to close gaps, and primary care reforms aimed at enhanced geriatric services can go a long way. These can lead to better outcomes for clients while also diminishing costs for institutional care.
More importantly, it brings more cohesiveness to a valuable range of services already in place and accentuates healthy aging, disease prevention, assessment, treatment and care.
The reality today is that most people have difficulty working their way through our complex social and health systems. Multiple levels of government have multiple and sometimes overlapping mandates. This serves to confuse even those having the inclination and the ability to surf the worldwide web. Even where there are repositories of information on system access points, people are challenged to know which supersedes which.
Making matters all the more complicated, these things must all be done with a view to ensuring some intergenerational equity. Our younger people continue to need education and supports. Others with means that have aged continue to be frustrated that they do not qualify for, or have had their benefits clawed back from, programs they helped fund. Surely these sentiments do influence the human condition.
Investments in training and innovation continue to be required for a vibrant economy, for competitiveness, productivity and prosperity. Taxation as a source of government revenue is considered by many to have reached a saturation point. As such, perhaps the real opportunity lies in empowering our aging population to contribute, as it would if uninhibited by disincentives and competing policy priorities, all the while affording the health and social services that we as a nation require. The CGA believes this is both positive and reasonable.
Again, thank you for the opportunity. I look forward to your final recommendations.
Paul Darby, Deputy Chief Economist, Conference Board of Canada: It is an honour to appear before this committee. I will be focusing on work we have done regarding the determinants of the retirement decision, and this also builds on work done by Statistics Canada.
As mentioned, the issue is that, given the aging of the baby boomers and our low fertility rate, we are looking at looming labour shortages over the medium to long term as defined by demographic projections. One of the important levers we would like to use in trying to mitigate the impact of these labour shortages would be to have a higher participation rate among older members of our society.
If you look at the share of the population aged 65 and older, according to the most recent population projections from Statistics Canada, we see that roughly 20 per cent of the population in the year 2025 will be over the age of 65, growing from roughly 12.5 per cent in the year 2000. Twenty per cent of the population over 65 is a one-in-five ratio, which obviously is not an insignificant number.
The serious problem for the labour market is that labour force participation rates plummet as we age in Canada. For the group between the ages of 25 and 54, which represents the core working cohorts, in 2005 their participation in the labour force was about 85 per cent. That rate begins to drop off before the age of 65. When looking at people aged 54 to 65, already the labour force participation rates come down to about 58 per cent — so 85 per cent down to 58 per cent, even before you are 65. People are retiring before the age of 65. Then, of course, the rate falls off a cliff to be about 8 per cent in terms of labour force participation for the 65-and-over age group. If you are talking about 20 per cent of the population having only an 8-per-cent participation rate, you have a big problem, as everyone has pointed out.
With respect to our own estimates of the labour force participation rate, in spite of increases in female participation, around 2011 it peaks at almost 68 per cent of the population and then drops down to about 62 per cent by the year 2030. We are losing 6 percentage points off the labour force participation rate almost entirely because of the aging of the population. As people get older, they are less attached to the labour force.
With respect to labour force growth, it goes from 1.8 per cent in the first five years of this decade down to only 0.4- per-cent growth per year on average between 2026 and 2030. That, by the way, is with very aggressive immigration assumptions. We assume the Government of Canada almost hits its target of 1 per cent of the population. I think we are bringing in 360,000 immigrants every year in our population projection assumptions. That is a lot of people. Even with that aggressive assumption, which is pretty much the only source of population growth, we have only about a 0.4- per-cent increase in the labour force growth each year. We have a serious problem unless something changes.
The message I want to leave today is that changing the behaviour of elderly people toward retirement will be difficult. We need to start working now and get moving, but I am nervous that we will be playing and tinkering at the margins. This will be a tough supertanker to turn, if I can mix a metaphor.
The average age of retirement in Canada has in fact been coming down, unfortunately. Over the last 30 years, it peaked at 65.1 years. In 1977, it hit a low of 60.9 years. We lost roughly four years of average retirement age. It has been steady in the last four or five years. In 2005, the average age of retirement in Canada was 61.4, well before the age of 65.
In terms of getting a sense of what determines a person's decision to retire, we did some econometric work, but we based our choice of the right-hand-side variables, the determining forces, on Morley Gunderson's study. In 2001, he did some research based on the General Social Survey produced by Statistics Canada, Cycle 9, which I would love to see updated. In his analysis, he looked at the probability of someone retiring depending on certain factors, given that five years earlier they had been working and active in the labour force. In fact, people who were covered by a pension plan were 21 per cent more likely to have retired over that five-year period. That was by far the most significant factor. If you had a pension plan, you retired — at least you were 21 per cent more likely to retire.
Retirement is a family decision so, if your spouse has retired, you are 12 per cent more likely to retire yourself.
Seven per cent were more likely to retire if their health was poor. This is in some sense being forced out of the labour market by poor health.
If you are receiving interest income, you are 5 per cent more likely to have retired in the last five years.
If you belong to a high-prestige occupation, you are 7 per cent more likely to retire. The whole idea that someone has an interesting and fabulous job, loves to go to work every day, and is in a high-prestige occupation that will keep them working past the age of 65, is not borne out by the data. This is probably because, as far as we can tell, the single most important determining factor in retiring is whether you can afford it. If you have a high-prestige job, you are probably making more money, have a pension plan or have put money away. Guess what? You can afford to retire.
The pull out of the labour market in terms of retirement is strong. If you have the income to support the decision to retire, you tend to make that decision, which makes changing that behaviour tough.
The data suggested that homeownership and educational attainment had no impact on the retirement decision, except for those who just had a secondary school diploma. If all you have is a high school diploma, you tend to stay in the labour force longer, but I would argue that is because you are probably in a job that does not have a defined benefit pension plan, or you have not been able to save enough money to allow you to afford to retire until you collect CPP or QPP at the age of 65.
Adding it all up, it forcefully drives home the fact that retirement is driven by whether you have the income to allow you to retire.
We did some econometric work to get a sense as to whether the data bears that out from an empirical perspective. We tried to explain the average age of retirement. We used as right-hand-side variables some sense of the assets available to Canadians per person. We divided that by average incomes in the 50 to 54 age group because we thought there might be a trade-off between giving up income by retiring, and the more income one is giving up may convince someone to delay retirement.
We also looked at health and how the business cycle might affect the retirement decision. You may be forced out of a job if your firm is going through hard times. All of these variables — health, business cycle and average income — were important but by far the most important was income and assets.
In conclusion, I suggest that we have a situation where the average age of retirement in Canada has gone in the wrong direction. It has fallen. It is certainly stable over the last four or five years, but people are retiring at age 61 and not waiting to age 65. Income seems to be by far the most important determinant of the retirement decision. If you have that income, the pull into retirement is strong. In my opinion, it will be hard to change these behaviours that Canadians are exhibiting. This challenge is one that we must take seriously because, without trying solve this problem as I suggested at the beginning and as everyone knows, we have an important labour force shortage issue on our hands.
The Chairman: Thank you all for your presentations. We want to engage in a number of questions, but before we get too far, I have one for Mr. Lefebvre. You made a statement that stood out for me when you indicated Canadian companies are contributing 7 per cent less to workplace training than they did a decade ago.
Mr. Lefebvre: That is based on the assessment of the global competitive index. We have seen the trending down and our understanding is that we will continue to trend down.
The Chairman: Any reason for this?
Mr. Lefebvre: Yes, the competing resource requirements. The cost of being in business is increasing all the time; competitiveness is struggling.
The Chairman: What about government plans or initiatives that might encourage employers to put more money into training?
Mr. Lefebvre: There must be some form of sponsorship to support these initiatives to encourage employers to behave that way. One concern we have had is how government balances the priority of helping the boomers or the aging population, while at the same time creating innovation to support their requirements. We need to inject more money into both secondary schools and universities, as well as find ways to rebate money back to employers for professional development in the jobs so that they can perhaps grow into more senior levels of positions.
Mr. Darby's point is well taken, namely that the high-income earners, the high-status positions, can afford to retire. I worked in health care and industry for a number of years and recognized that the ones that probably fall between the cracks are those who would like to beef up their pension plans. Regrettably, there is nothing that allows them to go from a millwright to a foreman, as their knees and elbows start to go from working on machines. There is not enough proactive strategy within business to accommodate that movement. These are folks that, anecdotally, would continue to work but perhaps not to age 65. Again, we learned that people on average are retiring earlier than that. We must find a number of ways. There is no one way that will give us that. We must change ageism and stop the way we think about it. Employers tend to think that someone at age 65 is beyond the curve when we all know people who are just hitting their stride at age 70 and more. We must find ways for employers to do that. The only way they can see it is by giving them financial support, extra tax credits, and so on towards training of second-tier management or professionals within the workplace.
The Chairman: Realistically, in terms of such tax credits, will that only work for large employers? Is it realistic to think that a small employer can do that kind of training even with a tax credit system?
Mr. Lefebvre: We have recently finished work on competitiveness and productivity. We believe that would be more helpful to the small and medium-sized enterprises, SMEs, in Canada. We have learned that owner-managers have difficulty delegating responsibility, namely and predominantly because they started the business, they nurtured it; it is almost like a child to them. Unfortunately, they do not get the level of sophistication that large businesses have. Large businesses are accustomed to having lawyers, accountants, engineers and other professionals; small entrepreneurs do not. Since a large proportion of the jobs in Canada are in the SMEs — as high as 95 per cent, depending on where you set our boundary — this would give the proper motivations for these owner-managers to delegate responsibility and for some of the people to grow with the firm as it grows, perhaps even getting into export and growing the productivity and the efficiency side of the business.
Senator Keon: Mr. Darby, do you think the further deferral of tax-sheltered savings accounts, or whatever you want to call them, would encourage people to stay in the workforce? This budget moved it from age 69 to 71. However, many people are certainly not prepared to live on their so-called pension. They are heavily dependent on the money they were allowed to invest in these tax-sheltered schemes of various kinds. It used to be that you had to start withdrawing it at age 69. I have been there, done that.
Senator Murray: It was age 71 to start with and went back to 69.
Senator Keon: Yes. When I was 69, I had to withdraw it but I think you are correct. I am not entirely up on the law.
If that money could be deferred, I think it would encourage people to stay in the workforce.
Mr. Darby: I think that is true. We have not done the sort of quantitative work to get a sense of how important that might be. All of these policy changes that would encourage people, perhaps from a financial perspective or give them more flexibility from a financial perspective, to keep working are good.
One of the most regrettable policy changes we made, looking back, is when we allowed the CPP or QPP to be accessed at age 60, I believe. Many people are accessing it. Some countries in Europe are beginning to move — and obviously this is politically controversial — back the age at which you can collect a public pension plan, increasing the age at which you can do that, to some outcry from citizens.
All recognize the fact that, if you are giving people income at a fairly early age in their lives, associated with retirement, many people will exercise that option. Certainly, the measure you are talking about is a step in the right direction. I only fear it is a baby step. We may have to start thinking about a few more drastic steps, if that is possible, because this will not be easy to change. That is my sense.
Senator Keon: Mr. Lefebvre, it is my impression that `Freedom 55' has not turned out to be just as advertised. There are many people who regret accepting Freedom 55. They are finding that the cash flow they are living on does not meet their expectations.
What is your experience in that? What do the actuaries have to say about that? I know you are an accountant. I suspect you know the curves.
Mr. Lefebvre: I am not qualified to speak as an actuary. Having said that, we have colleagues with whom we work who are actuaries. Much of this conversation boils down to expectations. In some of the work we have done in the past, we have spoken to folks. They met financial planners 20 years ago who spoke about Freedom 55. They tell us they relied entirely on that planner. We know what happened in the early 2000s with respect to yields in equity markets and such. First, what was promised or expected did not materialize; second, citizens or individuals are relying on the financial systems, in my personal view, a little too much to make those planning decisions for them.
They go to see someone and say, "I need $40,000 a year for X number of years." It is plugged into a formula and they say, "This is what you have to contribute per month." When the person is 65 and they see that it is not what they planned to receive, they have an issue but it is too late. This is what people have told us. The financial planners, of course, have sophisticated instruments by which to do these calculations but Canadians, in our experience, are generally not aware of how financial planning works and do not necessarily understand the caveats so we have advocated that, starting as early as high school in home economics, people learn to budget and manage their own expectations. I suggest that probably most of us — perhaps as senators you would have seen things that would have scared you away — have lost money in investments. Even in the absence of scandals we have lost money. Many Canadians cannot weather that loss. For an individual earning a low income, to lose 10 per cent or 20 per cent of their portfolio is momentous. We lose track of that and the industry loses track of that, whether we be bank managers or financial planners. There is not enough risk analysis done. That is where people find themselves short.
The Chairman: Mr. Stone, I was interested in your chart, which showed the annual average participation rates by provinces, ages 65 to 69. We have had some presentations before us dealing with the variance from province to province on aging, and that the Atlantic provinces and British Columbia tend to have larger aging populations than do, for example, young provinces such as Alberta. Yet, your chart here seems to imply that the very provinces that are aging are the ones that have the lowest average rate of participation between the ages of 65 and 69. Is there any particular explanation for that?
Mr. Stone: I can speculate but would like to invite my colleague, Ms. Zietsma, to offer her view. After she speaks, I will add anything I think necessary.
Danielle Zietsma, Senior Economist, Labour Statistics Division, Statistics Canada: I started looking into this last week to get a handle on what the participation is for older workers in the different provinces, to see what might be happening. Saskatchewan in particular has a high participation rate. I cannot remember the exact number of people in the 65 to 69 age group living in Saskatchewan, but because it is not as big a number, certain industries might be driving that. For example, in Saskatchewan I would expect much of the high participation among workers in this age group would be in the agricultural industries, which are fairly predominant in that province. In Alberta, in general we have seen that the labour market has completely taken off. This is not a new story to anyone. That is also passing itself on to older workers. We have seen rapid wage growth in Alberta over the last two years, which could also be influencing some older workers' decisions to stay and to participate.
The Chairman: I was particularly interested in the lower ones, though. Nova Scotia, which has an aging population, has the lowest participation of the provinces that you identified in the workforce, yet it is not known for its high incomes particularly, vis-à-vis Alberta, for example,. Mr. Darby, you look anxious to get in on this.
Mr. Darby: Again, I must admit it is speculative but we know from the data that British Columbia and Atlantic Canada are the recipients of many retirees from Central Canada. Those people go to there to retire, not to work. I do not have the exact figures, but we have a net interprovincial migration date by age group. We know that British Columbia is a recipient of a large number of interprovincial migrants over 65. They are not working; they are retired. It brings down the participation rates for the 65 to 69 age cohort.
Senator Murray: Is the proportion of people who happen to be in the public sector, including the military, a factor in the phenomenon to which Senator Carstairs has just referred?
Mr. Stone: I am not aware of that particular factor being a weighty one, but with regard to the lower rates down East, if you are beginning with relatively low incomes, pillars 1 and 2 are likely to provide a decent replacement rate and that would help to make it possible for you to think you can carry on.
I would underline Ms. Zietsma's remark about the demand. The demand has to be there, as we see in Alberta. If the demand is not there, then people tend to not come into the market at that age because you do not have to, especially if the public sector is providing a decent replacement for those of relatively low incomes to begin with.
Senator Mercer: This is not where I was going with the question but, for a Nova Scotian, it leads nicely into it. I am the only official Nova Scotian at the table. There are two others who were born in Nova Scotia but who represent other parts of the country.
It would seem to me that the military and public service aspects of the Nova Scotia population would skew the numbers a little because of the high military and public sector participation, particularly in Halifax. I myself come from a family of public servants and military people. My sister and I are the only ones still actively in the workforce; the rest are all in your statistics.
It has the best quality of life in the country, and that goes to attracting people to retire there. Some people summer there, as well, which is good.
That is enough advertising. Let me get on with the question.
I am interested in the declining amount of money provided for training. Does that go across all sectors? I have spent my adult life managing not-for-profits in some of Canada's largest charities across the country. I know that every time I put together a budget, my volunteer board wanted to know why we were spending so much on professional development. My answer was always, quite simply, because I want to keep the doors open next year and the years after. Can we break those numbers down by sector? Can we tell which sectors are paying closer attention to professional development?
Mr. Lefebvre: I do not have that information but we could look into it. We were looking at national averages in comparison to other countries, so we did not drill down or isolate that, but I can certainly ask colleagues to look into it.
Senator Mercer: That would be worthwhile. I am concerned that industry — whether it be the sector I come from or the manufacturing or financial sectors — is not paying attention to professional development. They will pay the price. We, collectively as Canadians, will pay the price.
One of you talked about the early access to CPP at age 60. I am finding it interesting that you see this as a problem with respect to maintaining participation in the workforce. I do not want the impression to be left that it is a problem with the Canada Pension Plan, because we are told that the CPP is secure and can withstand the financial drain of people drawing at age 60. Am I accurate there?
Mr. Darby: You are correct on the latter points.
Senator Mercer: It is not the financial side; it is actually the participation side.
There is another avenue we have not measured here. People do not participate in the workforce beyond ages 60 or 65 after they choose to retire. That is paid work. Having spent my career working in the volunteer sector, many of the best volunteers, whether they be at the board or envelope-stuffing level, have been people who are retired and have the time. Has that been measured by anyone in terms of participation? It seems to me that is a major sector. The volunteer sector in this country is larger than the automobile, gas and oil, and agriculture sectors.
It is an important sector that we need to study. Everyone is nodding but no one seems to have an answer.
Mr. Stone: The numbers I have seen would suggest to me that you would at least double the participation rates in the older ages if you took unpaid volunteering into account.
Senator Mercer: When we measure the overall economy and how this country works, if you were to take those volunteers in the retired category out of volunteering, many of our non-profit and community organizations would collapse.
That is something we should think about as we go forward.
Mr. Darby: What you are saying is absolutely true. However, we already have a volunteer sector in Canada. We have not analyzed it strongly because, as you point out, it is not paid employment so it is often hard to track the data and measure the output. I would be the last person to suggest that it is not a highly important part of the fabric of Canadian activity. However, it is also important to recognize that that activity is taking place now. As we look at a large number, millions of Canadians retiring or thinking about retirement over the next 10 to 15 years, as they move potentially into the volunteer sector, will we have an enormous excess supply of such workers? Will we somehow be able to transfer work from the productive, paid part of the society to the volunteer side? How will we get extra benefits from that? How will we ensure that Canada continues to demonstrate the kind of economic growth and wealth generation we would like to see?
That volunteer sector exists now so we must be careful. I agree it would be nice to measure it but we would have to be careful about thinking that, because many people will be potentially available for the volunteer sector, that that will somehow increase output or economic activity or even the general welfare of Canada.
Senator Mercer: I would argue that, if suddenly Canadian society had to pay for those volunteers, then you would pay attention because that would have a dramatic spike on everything since it would drive everything up.
The volunteer sector probably suffers from the same effect as other sectors, where there are more people retiring, but the same percentage are volunteering as have in the past, so the numbers may go up because the pools are larger. However, we would not want to be in a position where we would have to pay for that, so we need to factor that in with any study.
The Chairman: I would like to go down the panel and ask each of you what you think would be the most important factor in encouraging older workers to remain in the workforce. What is the most important thing a government could do to ensure that people stay in the workforce longer?
Mr. Darby: Change the age at which the CPP/QPP kicks in; increase it; phase it in over time; point to the European examples; and go from 60 years back to age 65 or 70. We are healthier and living longer. I think that would have the biggest bang for the buck, frankly. Whether you can manage that politically, I confess, is a whole other difficult question but I think that would be the single, most significant thing you could do.
Mr. Lefebvre: That is a very good solution, and challenging. My solution is less challenging but more nebulous. I think it goes back to innovation once again. It is about removing the boredom that sometimes sets in. What happens is that we all get bored with our work at some point in our careers and, as we age, of course, we have more resources so we can walk away. It is about finding instruments that render and keep the jobs interesting.
We noticed, for example, in the public sector that people retire relatively young, in their late fifties. I believe it is about 58 years old. That is young to retire. While some would want to retire because they have good health and abundant money, I suspect that some would stay on if opportunities were granted to them. We need some type of linking back to what motivates people and keeps them stimulated. There needs to be behavioural research in that area directly with both the private and public sectors, intentionally and deliberately.
Ms. Zietsma: I am looking at unemployment rates for older workers and they exist. In 2006, we had a healthy labour market. The unemployment rate among those aged 60 to 64 was 5.4 per cent. That indicates to me that there is a desire for people to be working, so how do we determine what is underlying the difficulties for these people to find jobs? It is obvious to me there is a desire to be working, though not by everyone. We need to look at how to help those who do want to work.
Mr. Stone: As you probably know, we at Statistics Canada are not at liberty to speak about specific government initiatives, but I can underline something which is already in your first interim statement, and that is the importance of finding ways to open up choices for people.
I would also reiterate something which I said earlier. We have coming now into the older ages a much more vigorous, healthy, activist group comprising the baby boomers. To a certain degree, Freedom 55 has lost its lustre because people want to stay connected in a variety of ways, so you might want to think about how to help them and facilitate the desire to stay connected in a generation that will demand it to a high degree.
The Chairman: Thank you.
Mr. Darby, you are quite right. I think there would be a great deal of reluctance on the part of any politician of any political stripe to say we will automatically cut people out at the age of 60 for CPP/QPP. However, what has been presented to us is the fact that there is an actuarial disincentive to wait until you are age 70 in order to collect CPP/ QPP. So would there at least be a move in that direction by making the payout at age 70 more reflective of what a person at 70 should actually receive than what they presently receive?
Mr. Darby: Absolutely. That is something that needs to happen tomorrow and, in some sense, it is an obvious move. It is also important to recognize that that actuarial disincentive to retire built into the CPP/QPP is small. Again, we are tinkering at the margin. It is a no-brainer if I can use that expression. We should move on that tomorrow. However, again, you may not get a huge change in behaviour from altering that actuarial disadvantage. It is quite small.
Another issue that has surfaced in our research in terms of staying on in the workforce is flexible work hours. A lot of people over age 60 would like to work but would like to work shorter weeks, part-time or half-time. Anything the government can do to facilitate that process, for SMEs particularly, would be productive.
As I think Mr. Stone from Statistics Canada pointed out, many people who have retired fairly early come back into the labour force as self-employed. They often try to form their own companies and go into the SME segment. If that can be encouraged, access to low-cost capital, access to risk capital, incentives to make the formation of companies for older people easier, it would also pay substantial benefits. England has done some work in that area, and we could look to their experience for guidance.
Senator Murray: I do not know whether we have had enough or indeed any evidence as to what the federal government itself is doing with its own workforce, the public service, to adapt to these conditions. If anyone knows, I would like to hear it. As for the others, I will not embarrass anyone by asking how many people over age 65 are employed at the Conference Board of Canada or what your profession is doing with its own members, Mr. Lefebvre. However, I think it is fair to ask whether you know of industries or even companies that have got ahead of the curve on this and whose policies would serve as best practices for all of us.
Mr. Lefebvre: The information we have is scattered. I cannot give numbers. Some of them, like Suncor and others, have been proactive. You raise an interesting point. Last year, we ourselves in our own workplace changed the group benefit program. In the past, you were covered until age 65. We have now changed our policy due to one of my own direct reports, in fact. I think we have to walk our talk.
Senator Murray: How have you changed it?
Mr. Lefebvre: We moved it to the age of 70. We will be dealing with it again in another four years if this individual stays. He intends to stay on until the age of 76. We believe it becomes contagious. It is like any other corporate deed. As this information gets out, they can attract the talent. It allows them to retain some of the high performers. In the next 20 or 30 years, we will see a very different benefit regime within the private sector.
Mr. Darby: We have some examples in our research in terms of companies that we feel are on the leading edge of practice with respect to maintaining older workers on their payrolls. It is not my primary area of expertise. The vice- president of our human resources division at the Conference Board has done a fair amount of work in this area. He should come to a committee hearing and share his wisdom on that topic.
I believe Home Depot, in some senses, has done demographic analysis in terms of the average age of residents within their catchment area for any particular store. They have discovered that older people tend to like to be served by older people. Older people in the store often have a better customer relationship. They have made some strides to try to make life easier, if I can put it that way, for older workers and bring them into stores where they sense the demographics suggest that would represent a payout for Home Depot. They have also learned that a mixture of older workers with younger ones in the service sector, where you are interacting with a customer but where customers are looking for advice, seems to work well.
There are also examples from financial firms in England, where financial planners meeting with people worried about retirement income are often better served by older financial planners on the other side of the desk. There is a bank or financial firm in England that has made a proactive effort to hang on to its older workers, recognizing this fact.
We have some examples of practice. Unfortunately, it is not my strongest area of expertise. The other message is that they are exceptions that prove the rule, in a sense. The progress, I think, is slight.
Senator Murray: As far as the federal government is concerned, I presume you will put forward Statistics Canada as a leading example, with Dr. Fellegi being a man over 70, certainly, and still in his prime.
Mr. Stone: I dare not speak for the federal government as a whole because I do not know. In our organization, we have a number of initiatives that encourage retirees to come back within the law to help us. With the changes that have been announced in the budget, we may see a lot more of that now.
In addition, I happened to be at a conference convened by a former Minister of Labour where there was a person from the Treasury Board who maintains the department's records on retirement ages of public servants. He was reporting that the proportion of 65-plus public servants who were hanging on had gone up substantially. You might want to probe that Treasury Board file to see what is happening with regard to the behaviour of senior public servants.
I invite you to look at chapter 16 of my book, of which I was the principal author and where I compared the public and private sectors in terms of their transitional patterns. For those who entered the transitional stage later on, the public sector is hanging on to them for longer than the private sector. We might be a venue of some best practices.
Senator Murray: I think we have to get at whether there are government-wide policies in the federal government on this subject.
The Chairman: I agree. Before I turn to Senator Chaput, neither of you, in the four ways you identified as to how we could make it easier for older workers to remain in the workforce, mentioned the difficulty with many private pensions. If it is the best five years of their work experience, that is one thing, but if it is the last five years of their employment, where is the incentive for them to go part-time afterwards? If they are to go part-time, then their pension is given a huge whack in terms of their ability to maximize their retirement income. Mr. Lefebvre, you are nodding. Would you like to comment on that?
Mr. Lefebvre: We speak to it in our paper. These policies must change to accommodate exactly that. I did not speak to that because I take it as a given. They will be forced to and, if they are not forced to, they should. This is one of the disincentives I referred to in my opening remarks. We penalize people.
[Translation]
Senator Chaput: One of you mentioned that the main reason why a person retires is that he is either financially able, or believes he is financially able, to do so. When a person relies solely on his investments and finds himself with a lower-than-expected income in retirement, I would think retirement would be a less enjoyable experience. According to your research and your analyses, how many retirees are happy with their situation versus the number of those who regret the decision because their income is lower than they expected it to be?
Mr. Stone: Statistics Canada has not done this type of analysis, but there are many who claim that baby boomers believe they will not earn in retirement the income they once expected they would earn. That is one of the reasons behind the increase in the number of baby boomers in the labour force.
Senator Chaput: My second question concerns the baby boomers, but if I understand correctly, you are telling me that because no comparative analysis has been done, you cannot really give me an answer to my first question.
Mr. Stone: We have not done this kind of research.
Senator Chaput: Speaking of baby boomers, more and more of them are saying that they are not really interested in retiring, for a variety of reasons; they will not have enough money to stop working, or they want to continue being active members of the work force. Percentage wise, what impact could their decision have on future labour force entrants?
Mr. Stone: That is a difficult question to answer because you are asking me to predict the behaviour of baby boomers. Nevertheless, signs in Canada already point to an increase in the participation rate of seniors in the work force, with baby boomers leading the way. Based on their level of training, we can expect this trend to continue.
Senator Chaput: Could the manpower shortage in Canada be less of a problem precisely because baby boomers want to continue working? Are there other steps that the government could be taking?
Mr. Stone: That is what the experts are saying. Canada is fortunate in this regard, when compared to Europe, for example.
[English]
Senator Mercer: I sit on the Standing Senate Committee on Agriculture and Forestry and we are engaged in a major study on rural poverty. We have heard testimony from across the country, and someone mentioned the age of people in rural Canada who are still in the workforce, not necessarily because they want to be but because they have to be. There is no alternative. They work in industries such as agriculture and the fishery where there is no pension plan. The only pension plan may be the sale of the family farm or the fishing boat to the children. Have your statistics and studies shown that to be true? Are there statistics showing that the rural poor stay in the workforce longer than the urban poor? The urban poor opt for earlier retirement because they do not have the option of working on the farm until they drop.
Mr. Stone: I have not seen comparisons of the urban poor versus the rural poor, but your speculation seems to be entirely in line with the research scientists completed and the thinking that, if you have little protection in terms of accumulated savings or pensions and you have the opportunity to continue to earn employment income, you will do that.
Senator Mercer: There are demographic studies by province but have you compared urban to rural? In the small Nova Scotia community in which I live, there seems to be a lower percentage of retired people because we are close enough to the city.
Mr. Stone: I have not done that comparison but we have a publication entitled A Portrait of Seniors in Canada, which was published two or three weeks ago. I think it contains some of these urban and rural comparisons. The details are not in my head at the moment but I will try to get you a copy.
Senator Mercer: That may also answer some of the questions about the provinces that are seen to be better places to retire, such as British Columbia. Vancouver Island is famous for people going there to retire. These statistics would help us understand that a little better.
The Chairman: I want to thank each of you for your presentation this afternoon. They have been valuable in terms of the detailed information you have added to our study.
Before our next panel comes forward, I wish to indicate that I will be cancelling the meeting on April 16, which means the committee will not be meeting any time in April. I had thought that the panel from the Philippines would appear after I was in Indonesia but, because of the urgency of the situation there, I need to lead that mission before the meeting in Bali. Our next meeting will be May 7 and will be chaired by Senator Keon because I still will not be back.
Our second panel this afternoon is on the theme of retirement flexibility. We now have with us Brigid Hayes and Derwyn Sangster. They will discuss the findings of the Workplace Partners Panel report Skills and Skills Shortages: The Views of Business, Labour, and Public Sector Leaders in Canada.
We also have Monica Townson. She is the author of several books and reports on pensions and retirement. Her latest book is Growing Older, Working Longer: The New Face of Retirement. We will begin with Mr. Sangster.
Derwyn Sangster, former Director, Business, Canadian Labour and Business Centre, as an individual: Thank you for the opportunity to speak about some of the findings of the Workplace Partners Panel, WPP, related specifically to older workers.
Let me provide a bit of history about the panel. In 2005, the Canadian Labour and Business Centre, CLBC, was asked to form the `Workplace Partners Panel' to bring together business and labour and other stakeholders to talk about skills shortage issues at large and, in particular, to look at some of the implications for older workers.
The CLBC moved quickly to set up a series of regional task forces. The first ones were in Atlantic Canada and Saskatchewan and looked at this issue largely through a regional lens. Those task forces reported in mid-2006 with a further one scheduled to begin later in 2006 in Manitoba.
In September 2006, the federal government withdrew funding from the Workplace Partners Panel as part of its expenditure review. This brought our work on the panel to an end and subsequently led to the closure of the Canadian Labour and Business Centre after 22 years of operation. As ex-employees of the CLBC, it is not without a sense of irony that Ms. Hayes and I are here to talk about the findings of the panel which we found interesting. We are very interested in the process of the Workplace Partners Panel.
In substantive terms, I want to begin with a discussion of demographic points. I will essentially focus in on one demographic piece that came out of our survey work and that is the near-retirement population in Canada — those who are within 10 years of retirement age. For the near-retirement population, the data we found in 1987 indicated that this group stood at about 11 per cent of the population; by 2002, it had moved to 20 per cent of the population; and, by 2021, it is projected to be 30 per cent of the population, which is a very large increase. In some regions, particularly the Atlantic, it will exacerbate some of the other trends happening — particularly the out-migration of workers — to the point where, in some provinces, particularly in Eastern Canada, we will see a declining workforce and the ensuing skills shortage issues.
That leads to our first conclusion, which is around the impacts of what I will call the `greying' labour force. As many workers retire, the skills shortage issues that will evolve raise front and centre the kind of questions the committee is looking at, which is around whether it is possible to do something innovative and how to address the question of possibly delaying or otherwise addressing some of the retirement issues.
I would then like to focus on the question of what proportion of retiring workers will be replaced. The CLBC did a biennial survey of business, labour and government leaders — both managers and labour leaders — for years. Our most recent survey in 2005 contained a variety of questions related to skills shortages, one of which asked business and labour leaders what proportion of retiring workers they felt would be replaced. The answers were all over the map.
We found that a majority of our private and public sector labour leaders expected a rapid attrition scenario involving high retirement levels and relatively low replacement levels. Many private sector managers saw a stable workforce scenario which involved low retirement and relatively high replacement proportions, while the public sector managers who responded to our survey talked more in terms of a rapid turnover scenario, which involves both high retirements and high replacements. These perceptions of a common future were very different and perhaps may illustrate how little attention has been paid to many of these questions.
What was also of some concern from the Viewpoints survey work was how few employers seemed to be doing much about the rapid turnover situation they were facing. About one-third of the private sector managers who were anticipating rapid turnover reported they were not at all active in terms of addressing the issue. This leads to a second conclusion from the Viewpoints data which suggests that employers do not seem prepared to deal with these older worker issues, nor do they seem to be necessarily always actively addressing their implications.
Our Viewpoints survey then went on to ask a series of other questions, including what actions are being taken to address future skills requirements. The question on these actions involved 16 potential answers, including increasing training, hiring immigrants or extending the careers of older workers.
In terms of ranking, extending the careers of older workers ranked seventh of 16 among managers in terms of its priority for addressing skills requirements. On the labour side, it ranked 15 out of 16.
Clearly, there are some issues around raising the profile of addressing the length of careers of older workers as part of the approach to addressing skills issues from this data.
The final set of data I will talk about is a further set of questions where we asked business and labour respondents specifically about whether we should extend the careers of older workers and, if so, how.
There is a table on this in our submission from which I would like to draw what I will call conclusions 3 and 4. According to the results of this particular question, extending older workers' careers was far from a top priority approach to dealing with skills needed both for managers and particularly for labour leaders. The majority of the labour leaders — about 70 per cent of them — responded that they did not see a need to extend working careers beyond the normal retirement age. For the managers the figure was lower, at 40 per cent, but still one might argue whether that is not also higher than one might expect. There was the question of the priority here.
The final conclusion we drew from the results of this particular question was that, if working careers are to be prolonged, the preference of both the managers and the labour leaders who responded to our survey — in different quantities, mind you — was for voluntary inducements to encourage this rather than legislated or mandatory approaches such as changing CPP regulations to require people to work longer.
These were a series of major conclusions that came out of broader statistical work of the Workplace Partners Panel. I would like to ask Ms. Hayes to pick up with some of the more detailed work from our task forces.
Brigid Hayes, former Director, Labour, Canadian Labour and Business Centre, as an individual: As mentioned earlier, we created two Workplace Partners Panel task forces at the regional level. We took the idea of the aging workforce as a framework for a discussion by business and labour about the primary challenges facing these regions in addressing their skills issues. The task forces themselves spent little time reanalyzing the statistics, things like dependency ratios or the proportion of immigrants who were older. Rather, the task forces sought to engage people — business, labour, government, educators and community agencies — in discussing the implications of the aging phenomenon from a personal and a community perspective.
Before the WPP initiative was shut down, we were able to complete two of the task forces. I would like to provide a flavour of what we heard and also refer you to our website, which we have kept active at www.wpp-clbc.ca; it has the records from all the dialogue sessions, the reports of the two task forces, as well as all the background material to which Mr. Sangster referred.
In the Atlantic provinces, which is where we began, we had four business leaders and four labour leaders on the task force. They decided to explore the issue of the aging population in the context of skills shortages under three priorities areas: the workforce, with challenges relating to youth, immigrants, the unemployed and the underemployed as well as older workers; economic development, with challenges relating job creation, productivity and innovation; and education and training, with challenges relating to stakeholder coordination, workplace training and lifelong learning and training in technologies.
After our task force met for the first time and worked through these issues, they went to four communities — Halifax, St. John's, Moncton and Charlottetown — to engage business, labour, government, community groups and educational organizations in a process we called a deliberative dialogue. The deliberative dialogue was structured so that people were asked to make choices for dealing with the issues under each of the three challenge areas. At all four sessions, participants took a holistic approach and refused to separate issues from one challenge to the other. The answers, as far as they were concerned, were to be found in multi-dimensional solutions.
The issues facing older workers were very much tied to the issues facing younger workers as well as to an overall sense of community cohesiveness.
Participants focused on things such as succession planning, mentoring, retraining, literacy, and ways to support older workers' decisions. They stressed the importance of leveraging the experience and skills of older workers to help mentor and train younger workers to effectively enable a corporate memory transfer. Many told us about the challenges they face in finding someone to leave their small businesses to, leading many enterprises to be closed or sold to outsiders when the owner retires.
Our participants told us that, if older workers were to remain in the workforce longer, their needs have to be accommodated. Some of the specific suggestions included the use of EI to support older workers staying on to mentor younger workers, or to ensure a solid succession plan, examining the role of the CPP and the availability of pensions or not as an incentive for older workers to leave the workforce before they wanted to, and the economic hardship of the one-month-without-pay before collecting CPP. Others spoke out about the need to accommodate those who wished to work, including shorter hours, flexible work arrangements and the reduction of shift work or physically demanding work. They also talked about the reasons why older workers sometimes choose to continue working past the official age of retirement.
For example, for older workers whose businesses have failed or who are not able to support them in retirement, the work is necessary. Others want to work because they enjoy the sense of satisfaction it gives them. Especially in Eastern Canada, older people work longer because there are not the young people to take over the jobs.
We also heard that older workers are not a homogenous group. Older workers approaching retirement and middle- aged workers entering the last phase of their careers face very distinct challenges. Middle-aged workers are often those who are most in need of retraining and re-skilling to remain current with their changing work. Many of these older workers are often the ones left behind by the rapid pace of change and who must sometimes upgrade their skills to remain current with new technologies or retrain to reposition themselves in emerging economic sectors as traditional ones collapse.
A particular concern was highlighted in Newfoundland and Labrador but was echoed in the other provinces. In a few years, there will only be 19,000 people under the age of 30. That means current and older workers need support to perform today as best they can in the economy. This is important since employers need workers now, and the youth will only be ready later on.
As well, stemming the tide of out-migration was very much seen as an economic question. Decent wages should be complemented by quality workplaces and employment.
We then completed our task force in Saskatchewan. We had nine senior business and labour leaders and two additional business leaders who provided advice. We had the same topics. What are the skills needs in the context of the aging workforce? They decided to talk about organizing the conversation around creating meaningful economic opportunities, the education and training continuum, and First Nations and Metis communities as contributors to Saskatchewan's economic and social success.
We had two dialogue sessions. We found here — and the regional information in this country is always so exciting — a very different take on the same issue — focus less on older workers and more on how to engage youth, First Nations and Metis populations. In that province, there is a large cohort available to move into the workplaces as older workers leave. The challenge is to ensure they have the skills necessary and that workplaces and communities are prepared to accept a workforce that looks and behaves differently.
Saskatchewan's discussion centred around a vision for the province. Many saw the means for moving forward as accepting a vision based on the knowledge-based economy and moving away from what they called the mythology of rural Saskatchewan. In fact, some argued it would only be when the older generation accepted this new vision that they would be able to more productively engage with Saskatchewan's youth and First Nations and Metis populations and better understand what they wanted.
Over the course of our task forces, we spoke with over 200 people. We had two strong messages from all five provinces. Without exception, all our participants chose improved coordination across business, labour, government and the education system as their number one action for moving forward to dealing with our skills issues. In addition, without exception, they all chose "encourage older workers to continue working for several more years" as the lowest priority in terms of action to deal with the issue of the aging workforce.
I believe we have left a solid legacy of engagement in research in this topic. We produced a number of handbooks, including one for Manitoba, which unfortunately we were poised to launch with that task force.
Every step of the way, we tried to ensure that what would distinguish this initiative was the leadership of business and labour. That was what the WPP was about, providing a space for labour market players to discuss and debate their needs and potential solutions. We hope that the legacy of the WPP, and indeed the information we have been able to give you today, has demonstrated WPP's contribution to this significant policy discussion.
Monica Townson, economic consultant, as an individual: I was asked to focus my remarks today on retirement flexibility. Flexibility, when it comes to retirement, may seem like a good idea, but it is actually an idea that can have a more sinister meaning when it comes to the current discussion of retirement options for the aging population. I will explain later what I mean by that.
I will base my remarks this afternoon on my recent book, which Senator Carstairs referred to, Growing Older, Working Longer: The New Face of Retirement. I left a copy with the clerk in case anyone is interested in pursuing that. It was published last fall, and to some extent the title indicates how `flexibility' might be interpreted in the context of retirement today. The book also emphasizes public policy on retirement issues, which I know is a focus of the work you are doing here.
Since I was allocated only seven minutes to speak, I will not be able to deal with many of the key issues covered in my book, but I will be pleased to try and answer any questions you may have on those issues — for example, the abolition of mandatory retirement; the shift of responsibility for retirement provision on to individuals; the possibility of increasing the age of eligibility for public pensions; the need to accommodate older workers; and the particular concerns of older women.
Until recently, many Canadians wanted to retire as early as possible and they were persuaded to aim for Freedom 55, which was a time when they would be free from having to earn a living and, if you can believe the television images, they would be able to laze on a beach in the Caribbean for the rest of their lives.
For most people, that is no longer an option, and of course for many people it never was. Volatile stock markets and low interest rates have pushed workplace pension plans into deficit positions and undermined the value of individual retirement savings. The majority of workers no longer have a workplace pension plan in any case. Many people are no longer sure about when they will be able to stop working, or even if they will ever be able to stop. Many of those who retired early are now going back to work, some for financial reasons and others because they prefer to keep active.
Increased life expectancy has fuelled that trend. After all, if you retire at 55, you may still have another 30 years ahead of you, so you probably have one-third of your life ahead if you retired at that age.
What is happening is that older workers are switching from full-time to part-time work, they are continuing to work for the same employer as self-employed contractors instead of as employees, or perhaps starting a business on their own after leaving a long-term job. In fact, we probably need a new word to describe what happens when workers grow old, because retirement has become a process; it is no longer a point in time when work stops and leisure begins.
Governments around the world are now trying to persuade people to postpone their retirement and to go on working to ease pressure on pension plans as the big generation of baby boomers gets set to retire. Doom and gloom predictions have become the order of the day. I know that you discuss this in the report you have already released.
According to some, Canada will not be able to afford its aging population, and their solution seems to be to shift the burden on to older people themselves so that, as they grow older, they will be expected to work longer and fend for themselves. That is what I have referred to as "the new face of retirement."
There are, in fact, already signs that that is happening as employers move away from defined benefit pension plans, where a pension related to earnings and years of service is guaranteed. Those plans are being replaced by defined contribution plans and group RRSPs, where retirement income depends on investment returns and no particular pension is promised.
However, it is not just the cost of the pensions that is fuelling the development of policy. As you have already heard, I know from a number of witnesses that workers who produce the goods and services the economy needs are essential to economic growth and prosperity. There is growing concern that, as the baby boom generation retires, fewer workers will be available to support the growth of the economy and to produce the goods and services needed by all Canadians.
Canada is now being pressured strongly by international bodies such as the OECD, Organization for Economic Co- operation and Development, to get rid of early retirement incentives, to abolish mandatory retirement, and to take other measures to persuade people to go on working so that the average age of retirement can be increased.
In fact, the Canadian government appears to be listening. In last week's budget, you may have noticed there were proposals to allow individuals to phase into retirement by reducing their hours of work and starting to claim part of their workplace pension while continuing to contribute to the pension plan. That is not possible under current rules because the Income Tax Act prohibits it.
It was also proposed in the budget to extend the age at which RRSPs and pension plans must be converted to a stream of income from age 69 to 71. Those policy changes are being presented as giving older people "more choice" and "greater flexibility" in planning for their old age. However, in many ways, I think that may be sugar-coating the pill. We should make no mistake about it — the fundamental purpose of all this is to get people to work longer as they grow older.
We also need to be alert to the danger that this policy approach may become coercive, so that people will be forced to go on working whether they want to or not. I was interested to see an advertisement running in the current issue of The New Yorker magazine which points out that there is a big difference between not wanting to retire and not being able to.
Senator Mercer: Thank you all for appearing today. I was interested in the fact that we have cut back the funding for the work that the Canadian Labour and Business Centre was doing. It seems to me that we got out on a limb and cut the limb off behind us. We were just starting to bear some interesting fruit. I do not understand it, and I will leave it to others to try to explain it to me.
I want to follow through on your conclusion number 4. If we were to have voluntary inducements to prolong careers, are you suggesting that one of those inducements might be to allow people to continue to apply for the CPP early, while they are still working?
One of the disincentives is that, if you apply for CPP, you have to be making nothing or very little. You have both mentioned workers switching from full-time to part-time. Are you suggesting that we allow Canadians to work part- time to maintain some percentage of their previous income while, at the same time, supplementing that income with CPP that they have applied for as early as age 60?
Mr. Sangster: The focus of that particular question was really to get at what you might broadly call voluntary versus more mandatory kinds of approaches. In behind that question, we did not come up with or, indeed did not suggest, particular kinds of voluntary measures. So I cannot say we were supporting any particular kind of incentives so much as looking at the principle of voluntary versus mandatory at the time, just to make clear the broad line of the nature of the measure and the response to it.
Senator Mercer: This group was made up of business and labour?
Mr. Sangster: Correct.
Senator Mercer: You said encouraging older workers to continue working for several more years was the lowest priority in terms of action to deal with the issue of an aging workforce. Would that be because of the influence of labour who, of course, have spent decades and decades fighting for good pension plans and good benefits for their membership?
Ms. Hayes: Surprisingly, no. In the Viewpoints Survey where we interviewed business and labour leaders and public sector managers, it was a low priority. The work I was referring to was the series of six deliberative dialogues with about 200 people. We were careful to ensure there was a balance between business, labour, education, government and community organizations. We found right across the board, and it was absolutely outstanding, that no one from any of the sectors chose that. The sense was there were other ways we can deal with our skills shortage issues given the rapid retirement in those vacancies. This was the least desirable, least interesting way to deal with it.
Senator Mercer: I am glad I asked this question. It is important to get your response on the record, because there would be an automatic misconception by people that the trade union movement would have driven that part of the conversation.
Ms. Hayes: Not that time.
Senator Mercer: I am sure on other things.
Without exception, all the participants chose improved coordination across business, labour, government and educators as the number one action required to move forward. Coordination between business, labour and government is a broad term. You could coordinate on many things. Could you narrow that down a bit?
Ms. Hayes: Yes. This showed up in all our discussions but where we saw it particularly well played out was both in Newfoundland and Labrador and Saskatchewan, where there are labour market bodies bringing together business and labour and the other labour market stakeholders, government and educators. There was a real sense that, if governments cannot make these kinds of decisions on their own, especially about the economy, there needed to be a forum where people could come together and work collaboratively. Where you had provinces with these structures, the desire was to strengthen those structures such as through the strategic partnership initiative in Newfoundland and Labrador and what is now the successor to the Saskatchewan Labour Force Development Board. In provinces where there was no labour market partner mechanism of any sort, there were calls for them. As a matter of fact, in New Brunswick, the number one call again right across the board was for the creation of the position of Minister of Labour, because there was a feeling both by business and labour that there is no place to go within the provincial government and no public space to have this kind of a conversation.
It was narrowed in the sense that there needed to be a place where these issues could be raised and talked about in a systematic way. One example where it really came together at our sessions was a president of a community college talking about difficulties in filling seats for certain kinds of trade programs, and business people saying they had no idea they did not have those seats, and they could have been filling them. There was that sense that the left hand and right hand did not know what all the needs were. Had they known, they may presumably have been able to work a little more cooperatively.
Senator Mercer: Finally, with respect to the urban-rural split, Ms. Townson, you talked about the particular concerns of older women. I am wondering if there is a differential between urban and rural in the work you have done. Have you noticed a difference in the willingness of workers in either rural or urban Canada to work longer, or perhaps a difference between rural or urban workers working longer because of their economic plight?
Ms. Hayes: From the dialogue sessions themselves, it would only be impressionistic. We did notice a big difference between the issues that were being raised for more rural areas than from people who were in urban areas, but not necessarily about retirement. Certainly, it is connected in terms of not having a very large pool to draw from. Succession planning was one topic. The small businesses were telling us they cannot sell the hotel, and selling the hotel is the retirement fund. That is the pension. They cannot leave it to anyone so they have to keep working. The work I did was very impressionistic, unfortunately.
Ms. Townson: I have not studied that issue specifically, but I was listening to you ask that question to Dr. Stone and it occurred to me that, overall, the statistics show that self-employed people have the highest median age of retirement of all people in the workforce. That may be an explanation for what you are describing because you talked about farmers and people with small businesses in rural areas. They presumably are self-employed so the number certainly shows they retire at later ages than people who are employees.
Senator Mercer: You made a comment about small businesses selling the business as the retirement plan. That gets magnified in agriculture and fisheries, selling the farm to the children or to someone else, and selling the fishing boat and the fishing licence, which is more important in certain fisheries. That is the retirement package.
Senator Keon: Ms. Townson, I will start with you and your concept of retirement flexibility. Some of the more courageous biological scientists now speculate that a healthy baby born of a healthy mother today has an excellent chance of living to 150. I have not heard any of them speculate on when they should retire or when the pension should kick in, but there is little doubt that this increase in longevity that we are seeing may increase very significantly in the next generation.
To come back to reality now or a more pragmatic approach, in your book, which I will read but have not had a chance to yet, do you speculate on how the whole process of employment, pensions and retirement can move along this line of expected increased longevity?
Ms. Townson: I do not address it in quite the way you are describing, but I do talk about the fact that life expectancy is increasing. The more realistic way to look at it when discussing retirement is what life expectancy is at the age of 65, which is traditionally retirement age. That has certainly increased. A woman at the age of 65 has a life expectancy of something like 20 years. A man at the age of 65 can expect another 16 or 17 years, on average.
You may also want to look at the reasons people retire and they are revealing. I have numbers here from Statistics Canada's General Social Survey. They give the reasons for retirement. This question was asked of people aged 55 or older who had already described themselves as being retired. Of those, only 10 per cent had retired because of mandatory retirement. However, 22.8 per cent of them retired because of personal health and 23.7 per cent because of personal or family responsibilities. Those are revealing numbers because they imply that many people think that, if they have not saved enough to retire by the age of 65, they will be able to continue working until they have enough money. They may not have taken into account that their own illness or responsibilities for other family members may prevent them from continuing to work.
While life expectancy at birth is increasing, other things may intervene. As a physician, Senator Keon, I am sure you are aware of the diseases that have increased, from diabetes to high blood pressure. They may intervene from birth to the age of 65 and may prevent an individual from continuing to work even if they would like to. Those issues must be taken into account.
Women have less choice about when they can retire because they are expected to be caregivers. There is increasing evidence that older women may be forced to retire because they are caring for other family members who may be elderly and frail or family members with disabilities. Their choices on when to retire may be limited, which affects their retirement income and financial security. It is probably one of the reasons we see much higher rates of low income among older women on their own than we do among older men.
Senator Keon: Mr. Sangster and Ms. Hayes, if you should choose to comment, please do.
As you were talking about this whole phenomenon and the priorities of managers in the system, in my experience with middle managers the pressures on them are truly tremendous to get these older people out of the workforce. First, they can hire two young ones for the price of one older one. Second, they can exploit the pension systems to get them out a bit sooner. Third, they can hire a couple of young whizzes who have just come out of computer schools and who carry skills they simply cannot get from an older employee.
It seems to me that we need a whole new approach if we want to deal with this issue. For example, industry, government and whoever else should separate the funds for senior employees from their average budget. In other words, do not even put a line in the budget for ongoing senior employees. Put a separate fund in there, whatever corporation it is, to continue to employ older people or to hire them back or whatever the case may be. Leave the flexibility that middle management has learned to enjoy so they can go ahead and do all these things without having to gently move the older employees out. Could you comment on that suggestion?
Mr. Sangster: We would have to look at the actual numbers. When you say it is possible for employers to gently move out an older worker who may be in some sense more expensive and hire two young keeners who may cost less, that assumes the young keeners are in fact available. There are issues around — not necessarily now, but at some point — the number of young graduates who may be able to fulfill that scenario. I am not counteracting the suggestion. I am simply saying it makes that assumption.
The survey we were talking about made the point that employers who responded to our survey did not seem to have given a lot of thought to any particular response. Their thought was, "Let it happen and we will respond as and when it happens." This could be for a variety of different reasons. As you say, managers have an awful lot on their plate. It may well be that small and medium-sized businesses are simply looking at how to meet the next quarter's payroll rather than how to deal with longer-term demographics in their workplace. There are many good reasons for that.
The main point we were making was simply that, for whatever reason, imagination had not been brought to bear on the possible ways to deal with this issue. We would not necessarily comment on any particular approach but simply say that there is room for more attention to be given to this issue.
Ms. Hayes: The only comment I would add is to reinforce what we heard in the Atlantic Provinces, particularly in Newfoundland and Labrador, which is the first province or state in North America with a negative growth rate — that is, those young people are simply not available. There is the incredible situation that, even if they want to hire young people, they do not exist. The drain is quite dramatic.
We were fascinated by the data from Saskatchewan as well. While there were huge numbers of young people, most were First Nations' youth who had not yet been given the opportunity to attain that level of skill. If we had made it to Ontario, we would have heard more of these scenarios where there is a better pool from which to draw. We had not heard of the capacity to do what you are describing.
Senator Murray: I have a question for Mr. Sangster and Ms. Hayes. Your project ended when federal funding was terminated. In fact, the entire Canadian Labour and Business Centre was shut down. I take it, therefore, that you regard the project to some extent as unfinished business.
Apart from the regional panel in Manitoba that had to be scrubbed, where were you going with this project? How did you see it developing over time? The question is important because it may give us an indication of areas where we need more research and, perhaps, more evidence.
Ms. Hayes: The Canadian Labour and Business Centre was a bipartite organization — that is, 50 per cent of our voting board members were business and 50 per cent were labour. We had all the provinces represented, including Quebec, the federal government and universities and colleges. That was the national picture.
Senator Murray: Was it related to, or did it come out of, the Canadian Labour Market and Productivity Centre?
Ms. Hayes: Yes. We changed the name about 1995. That was the organization. This particular project sustained that forum and, as with our other funding over the years, the endowment funding originally provided by the federal government had run out. This Workplace Partners Panel was to be a four-year initiative.
Our national board was what we called the national Workplace Partners Panel. We envisioned chapters of a book being talked about across the country. Rather than one big national task force trotting around the country talking to people, we decided to write chapters. We envisioned each part of the country being able to tell its story, given the same topic.
In Manitoba last June, we presented the findings from the task forces that had already been held to the national board and engendered a discussion about what we might be doing in terms of recommendations. For each task force, we commissioned what we called a handbook of diagnostics. We created one of those for each of the provinces. We met with the provinces that we had not seen to find out exactly how we could better position their conversation.
For instance, in Manitoba we saw it as the provincial government was seeing it, namely as a way for them to help negotiate or roll out their labour market partnership agreements that were still in play at the time. We saw it as fitting needs locally to have a business-labour dialogue and to have a topic — namely the aging work force and what we will do about skill needs — played out differently. We always envisioned that, after about year or two, or two-and-a-half years, we would have this giant book that looked at the same topic but from different points of view.
We were optimistic we could also make an annual submission to the Minister of HRSDC, Human Resources and Social Development Canada, to say, "Here are the findings we have to date," and share them with whomever. We saw it as a rolling project.
Senator Murray: Do you know whether the kind of work you had in mind for the future is now being done by any other public or private or public-private organization?
Ms. Hayes: No, we are not aware of any organization that is bipartite business and labour.
Senator Murray: When the funding was terminated by the government — and they knew, I presume, because funding for the project was being terminated, which would put the council itself to an end — were there explanations given by the government as to why it was no longer necessary to fund either the council or the project, or was it simply a matter of economics?
Ms. Hayes: We never received any official word as to the reason. There were news articles and quotes, but we were never provided a letter from the government. It was just in the expenditure review.
Senator Cook: I am a Newfoundlander, so you can see how preoccupied I am listening to you here. I will probably ramble a bit because I am trying to solve a problem.
I want to look at health care. If I look at your figures, there are 550,000 of us at the moment. If I take away the 19,000 under age 30, that makes us 531,000. The incentives for staying in the workforce and getting past that magic Freedom 55 mark must come from somewhere — that is, incentives do not suddenly start at the age of 50 but continue along the continuum. If I take a health care worker who graduated 30 or 35 years ago and is ready to move on with Freedom 55, just in the field of diagnostic imaging in my province it affects usage of the X-ray machine, ultrasounds, one or two CT scans and MRIs. Unless we have a mechanism along the continuum that provides incentives so that we can keep the older worker in the workplace to keep pace with advanced technologies, we will not achieve what we are looking for. You may find a person willing to continue to work if they feel well equipped.
When you go into coronary or critical care today, you will hear soft, rubber-soled shoes and quiet machines taken care of but managed by a person. If there is a gap in the system, I think we should probably look there at continuing education — whether at a community college or elsewhere — to provide that kind of service or something else to make it easier for that person to be happy so he or she will stay in the labour force. There is a shortage of health care workers all over the place. At the moment, there is such a shortage that the 55 who retired last year are coming in to do casual work at four hours a week with no benefits of any kind.
We are looking at something so complex that you cannot single out one piece and say, "We will fix it by doing this." I would like your response to that.
Ms. Hayes: You are absolutely right. That is certainly what we heard from your province and from other places as well. There is certainly not a coherent mechanism in place for ensuring that middle-aged older workers are provided with the kinds of skills training and literacy upgrading required to continue to work in many places, particularly when you are working in primary industries, such as fishing, where there can be physical issues and you are unable to stay there. I think that was where some of the questions around coordination came into play.
Right now, upgrading and seeking training more often than not is an individual response and not a collective or community response. We do not have plans in place that say we need so many workers of this type; let us provide the incentives. People talked about a need to provide more support in a coherent fashion rather than individuals making up their mind one morning to go down to the college to obtain upgrading. People have recognized it is very complex and if you make one change, it will have incredible downstream effects.
Senator Cook: Governments have a responsibility to provide that opportunity.
Ms. Hayes: We heard from people that it had to be done collaboratively, and not just by government but in partnership with people in the workplace who see this stuff every day.
Ms. Townson: What you are describing is part of a worrying trend. Many nursing jobs, as you know, have been converted to part-time jobs that are insecure, where nurses are on call and may not receive benefits. They are nor part of what is called a non-standard or contingent workforce. Forty per cent of women's jobs in Canada are now of that type of job. That is a worrying trend. Many more women than men are likely to be in those jobs. It is a big problem.
I can provide you an example where nurses themselves through their union have negotiated something. The New Brunswick Nurses Union negotiated an arrangement with the Canada Revenue Agency that allows them to draw part of their pension while continuing to work. That is an innovative way to allow people to go on working and get some incentive, if you want to describe it like that, because they can get part of their pensions from doing that. This is an option that governments will increasingly explore. The budget last week was moving in that direction, allowing people to start taking part of their pension while continuing to work, as a way of encouraging them to stay in the workforce.
Another thing with the nursing job is that it is physically demanding. There are arrangements for people in physically demanding jobs to take early retirement with full benefits, but those jobs are all male-dominated jobs — air traffic controllers, firefighters, policemen, pilots and so on.
Some years ago I was involved with a case where the Canadian Federation of Nurses Union asked to be added to that list of strenuous jobs that would allow them to retire early with full benefits, and they were denied. That is an interesting development. I do not know whether they would still be denied if they applied now, but what you are describing is part of a complex thing that involves women's work and how it is treated in our economy.
Senator Cook: I heard the word "literacy" twice. It took on another meaning for me, Senator Keon. We just finished our social affairs committee study on literacy. I always saw literacy through the lens of something basic. I just saw it as something far from basic in order to get to the point where we can provide incentives to older workers. Literacy is pretty high on the continuum for a skilled worker, and essential if we want to move forward.
Senator Chaput: The question has been addressed, but I would like to know more about the particular concerns of older women. You have talked about them being caregivers. It affects whether women go on working in the workforce because they have not got as much time as a result of being caregivers.
We just talked about the nurses in New Brunswick and how they dealt with being able to work part-time.
Are there any other particular concerns in regard to older women that might be addressed in your book that you would like to tell us about today?
Ms. Townson: I would be pleased to. My book does not focus specifically on women but I have written a number of studies in this area. One in which you might be interested was for Status of Women Canada on whether retirement income policies could be used to address poverty of older women.
There are a number of issues in relation to women and retirement. The first one that comes to mind is the fact that women live longer than men, so they must provide a retirement income that will last longer than those for men.
Second, most women are married when they come to retirement age and most women marry men older than they are. Therefore, they will be left on their own and spend longer in retirement than men do because husbands and wives like to retire at the same time.
Third, as I already said, most women these days are in paid employment. More than 80 per cent of women in the child-bearing years are in the paid workforce, which is a huge increase from decades ago when most women stayed home as full-time homemakers.
Even though these women will have been in the workforce, a good percentage of them are in these non-standard jobs to which I referred. Their earnings will be lower. They will be less likely to be able to save because their earnings are lower. When you get to retirement and you receive the Canada Pension Plan, which is based on your earnings, even if you were working full-time, the amount you will get from that pension is based on your earnings and will be probably half of what a man will get because men earn more. There are statistics on that that I do not have at my fingertips, but you can look at those.
Even where women work full-time, which is considered by definition from Statistics Canada as being more than 30 hours a week, they work fewer hours per week than men do — about five hours less on average — because of their family responsibilities. They are less able to be involved in overtime work and working in the evenings and so on. All of that will affect their retirement income when they get there. Add to that the fact that they will have to exist longer in retirement than men, you can see what the problem is.
It is a problem that needs to be addressed specifically, in my view. Very often studies and discussions of retirement do not address this. They seem to assume that men and women have the same needs and concerns, but that is not the case at all.
Senator Chaput: What would you recommend?
Ms. Townson: At the very least, you may want to have in your next report a section that deals specifically with the concerns of women in the way I have been talking.
There is another issue that concerns me. I think you have had witnesses here before who have talked about lifelong learning, life-course flexibility. Much of that implies that, if we can only get people to continue working, that would be a great bonus.
When they are talking about working, they are talking about paid employment. The older women doing caregiving are also working and contributing to society, but they are not considered valuable because they are not getting paid for that work. I am not suggesting it should be paid for, but we should think about that when we are suggesting we need people to work longer. Who is doing this unpaid caregiving and what are the implications of that for their retirement income? How can we provide more retirement security for those women? We should probably be looking at such things as the combination of old age security and the guaranteed income supplement and whether those two things combined are adequate for people who have no other source of pension.
We might look at providing a caregiver dropout in the Canada Pension Plan. Other witnesses before you may have suggested that. As you know, people who have a child under the age of seven and who withdraw from paid employment to look after that child can exclude those years when their earnings are averaged to provide their pension. There is no similar thing for people who must leave the labour force to care for older family members or family members with disabilities.
I have been involved in a Charter of Rights case where a woman who did just that claimed she should be entitled to a dropout as a caregiver. The tribunal refused her request and said, if they gave her a dropout, people who volunteered for the Boy Scouts would also want one. They could not seem to distinguish between caring for a human being who could not look after themselves and volunteering for the Boy Scouts. The lawyers from the Department of Justice appearing on behalf of the government made the same argument. That to me is very worrying.
If I had a recommendation, I would suggest you may want to consider including a chapter in your final report to address some of these issues and perhaps make recommendations as to what might be done.
The Chairman: I have several questions. In much of the evidence we heard from employers and business, they seem to think the status quo was all right and we did not need to make any changes. Yet, that is not the information we are getting.
We are hearing over and over again that mandatory retirement will disappear in this country, that court after court will rule that to be age discrimination and therefore contrary to the Charter. If you are going to have mandatory retirement disappear and workers wanting to remain in the workforce longer — and I do not assume it will be a huge number, but perhaps 15 per cent or 20 per cent — and you also have significant labour shortages identified in a number of provinces and also in specific industries, what will we do to meet those particular problems facing this country?
Ms. Hayes: Those are good questions, just to talk about why people are not necessarily prepared. When we do our Viewpoints research, talking to real managers — it is not a computer model — we have found that often there is a disconnect between what many of us will understand are the policy issues and what it looks like on the ground. You can come with all your statistics and understand it from a global perspective, but for the manager who is working day and day out, as Senator Keon mentioned, they are trying to just manage and survive. They do not have the wherewithal or the capacity to develop succession plans and figure out training plans.
Literacy is one issue. Most managers will say they do not have a literacy issue in their workplace, and yet the numbers from the international surveys will tell you something different.
Immigration is another issue. Statistically and from a policy perspective, we know that immigration will probably be part of the answer for skills shortages. That is not on managers' radar screens.
To my mind, there needs to be some way to bridge the disconnect between what we may understand to be good, sound policy directions, legal or otherwise, and what managers and people in communities are facing on the ground. They are not in a position to connect the dots and to act on the directions.
Mr. Sangster: One of the questions we asked in our Viewpoints survey was in regard to attitudes to the removal of mandatory retirement. On the employers' side, there was a significantly higher response in favour of removing mandatory retirement than on the labour side, around 60 or 70 per cent. On the mandatory retirement issue, insofar as our survey shows, the employer side was by and large more favourable.
To pick up on what Ms. Hayes said, addressing issues related to retirement is not the only matter we found that employers often do not have the opportunity to sufficiently focus on. I will talk particularly about small and medium- sized employers who are dealing with next week's payroll. One can talk about workplace training and health issues. There are a variety of issues that are difficult for someone running a small business to keep uppermost in their mind all the time. There is a real challenge among the smaller employers — which is what we have the most of in Canada as compared to larger employers — to have the time to sit back, breathe, and focus on what they might do. If there are suggestions, assistance or guidance that could help them with addressing these sorts of issues, it would be well received.
In the earlier session I heard someone talking about best-practice cases, larger employers, I would guess, setting the stage and leading the way in terms of how to address this issue. This might be part of the solution, not just in terms of dealing with older workers but on a variety of other human resource-related issues as well. It is a serious challenge, particularly for smaller employers, to get their minds around.
Ms. Townson: Some of the literature that I have seen on skills shortages questions whether in fact this will be as big an issue as many people think it will be. They point to the fact that there may be new technologies developed and that, in some sectors of the economy, there is not a problem.
One example I have seen is information technology, where the workforce tends to be quite young. There will not be the problem of skills shortages because there are few older workers in that sector.
If we expect people to work longer, then we must look at measures that will prevent discrimination against older workers. This is something I cover in my book. Many employers have a stereotype of older workers that they are not very productive and cannot adapt to training and so on. I am sure that measures could be taken to address those kinds of issues as well.
Certainly in the jurisdictions that have abolished mandatory retirement, there are indications that people do not want to go on working. One example I give in my book is Quebec, which abolished mandatory retirement 25 years ago and has one of the lowest median ages of retirement of any province. I think the median age of retirement in Quebec is 59.8 years, and this is without mandatory retirement. Clearly, when mandatory retirement is abolished, people do not want to go on working. What might change that is if the pension system continues to deteriorate and people do not have enough money and are forced to go on working. This is another issue.
The Chairman: My final question is to Ms. Townson. I was interested in your differentiation between voluntary worker and caregiving worker. I have no difficulty should some government at some point in time come along with a tax credit for voluntary labour that would encourage people in that regard, because we know that fewer and fewer young people are entering the volunteer sector. We know that older people have shown by good example, and will continue to do so even into their retirement.
The caregiver, however, is an entirely different situation, both I would suggest for children and more particularly for the older worker providing care, especially in situations where the caregiver may be as disabled as the person to whom they are providing care.
What is your view with respect to family members being paid to provide care to other family members? It has generally been considered a no-no, that if you paid a family member to look after another family member, they would abuse the system. We have said it is acceptable to pay outside workers, but it is not acceptable to pay family members to do this work. What is your view?
Ms. Townson: This depends to some extent on one's political perspective. In the past we have had social services that have provided for older people where there are long-term care facilities and so on. Increasingly, that has been off- loaded to family members and the so-called voluntary sector. Increasingly, family members are expected to care for older people and for those with disabilities instead of those people being cared for in the community.
Ideally, if you had good community facilities — and I am not talking about institutionalized care but about community support systems — for people who need them, frail, elderly people with disabilities and so on, then that would be an ideal solution. I think once you start paying family members, then you are moving away from that collective responsibility and you are reinforcing the idea that it is the family that has to do this.
One medium that has been suggested for people with disabilities is that if there is to be that kind of payment, it should be given to the person who needs the care and they can then decide who they want to pay to give them the care. That, of course, presumes that the person who needs the care is capable of deciding who they want to be their caregiver and then allocating the funds to them. I do not have a neat answer to your question, but I think it is going down a slippery slope to some extent if you start paying family members to care for other family members.
The Chairman: Interestingly enough, there have been some experiments done in Manitoba, particularly with the physically disabled, in which, instead of home care providing their services, they were actually given the dollars to hire their own caregivers. There was, in this case, limitation placed on family members but not on others. The experiment generally has been positive. They were able to find people who met their needs better than the home care system could, and it provided for a greater independent living.
Ms. Townson: If you go that route, giving the funds to the person who needs the care reinforces the autonomy of that individual rather than looking on them as a dependant of the family members. If you were to go that route, I would favour doing it like that rather than paying a family member to provide the care.
The Chairman: Thank you.
Senator Mercer: My political curiosity has the better of me. Mr. Sangster or Ms. Hayes, what was the budget of the CLBC and what percentage came from government?
Ms. Hayes: I cannot answer that precisely. I can tell you that the Workplace Partners Panel initiative was $2 million a year for each of four years, so $8 million had been granted us. It constituted slightly more than one-half of our budget.
Senator Mercer: That is 50 per cent plus. If there were an election tomorrow and the ensuing government decided this was a good idea and they would like to restart it, would that be possible?
Ms. Hayes: I am sure anything could be. It would be a matter of going back to business and labour and to those partners and saying, "Do you want to reconnect it?"
Senator Mercer: In your opinion, would we find people receptive to that idea?
Ms. Hayes: Our board did not choose to do this because they thought there was not a need. They were committed to the concept, and I think there would be people out there who would be.
Mr. Sangster: I would have to add, and this is strictly speculation, of course, that it takes a lot of energy to restart one of these things. There would be the very valid and practical issue about whether the folks around our table or, indeed, new people would want to expend that kind of energy if there were not some kind of assurance that it would not be wasted. That is a difficult question to answer.
The Chairman: Thank you, honourable senators. I have asked the clerk to ensure that copies of Growing Older, Working Longer: The New Face of Retirement are available for you. I thank each of you for your presentation this afternoon.
The committee adjourned.