Human Resources Committee on April 30th, 2013

[The Chair, Conservative, Ed Komarnicki]

Good morning, everyone. It's good to see you all here bright and early. We have at least one happy New Democratic member this morning for sure.

I'd like to welcome officials to our study on engaging experience: opportunities for older persons in the workforce. I understand we'll have a presentation by Yves Gingras. We'll also hear from Dominique La Salle and Catherine Demers.

We will have the usual opening remarks, and then questions and answers, alternating between the parties.

[Yves Gingras, Senior Director, Economic Policy Directorate, Labour Market Analysis, Department of Human Resources and Skills Development]

Mr. Chair, thank you for inviting Human Resources and Skills Development to today's hearing. We are very pleased to be here today to discuss the labour market situation of older workers.

Older Canadians, generally understood to be those 55 and over, are an important source of labour supply across Canada. In 2012, nearly one in five individuals who were working or unemployed were age 55 and older, which is up from one in nine in 2002. According to Statistics Canada, it is expected that by 2021 about one in four of these individuals will be age 55 and over.

The labour market performance of older Canadians has been relatively strong over the past decade as they experienced low levels of unemployment and the greatest increases in participation and employment when compared to other age groups. For example, the unemployment rate of older adults ages 55 to 64 was 6.3% in 2012, which compares favourably to that of youth ages 15 to 24, at 14.3%. It is similar to that of prime-age workers, ages 25 to 54, at 6.0%.

The employment rate for older adults rose about 10% between 2002 and 2012, and that of seniors almost doubled from 6.5% in 2002 to 12.0% in 2012. Between 2002 and 2012, the average age of retirement in Canada increased from age 61 to 63. This is expected to continue to increase as Canadians are delaying retirement later into their lives for reasons such as better health, later entry into the labour market with higher levels of education, and lack of retirement savings.

Some older Canadians face challenges when trying to find work. For example, once unemployed, older adults are more likely to become long-term unemployed. If older workers do find re-employment after suffering a job displacement such as a layoff, company downsizing, or a plant closure, many of these workers report earning up to 25% less in their new job compared to the previous job. Displaced older workers in small communities often face significant barriers to re-employment, especially in remote areas where there is limited economic infrastructure to support employment transitions and/or areas that were heavily reliant on traditional industries.

Promoting the continued participation of older Canadians to sustain our supply of labour is increasingly important, especially given employers in some sectors are reporting skilled labour shortages and that the pace at which Canada's labour force grows will slow to less than 1% over the next decade.

Recognizing that older workers' skill and experience are important for our economy, the Government of Canada has been committed to reducing barriers to employment among older Canadians.

Several programs have been implemented to directly support older Canadians looking for work. For example, the targeted initiative for older workers helps unemployed older workers who live in small, vulnerable communities affected by high unemployment and/or significant downsizing stay in the labour market by providing a range of employment activities, including training. Since the launch of this initiative in 2007, $270 million has been invested in this program and more than 27,800 clients have been targeted for participation in communities across the country.

In addition to this program, ThirdQuarter provides an online job forum that makes it easier for older workers to find jobs that match their skills and helps businesses find workers with the skills they need.

To connect Canadians, including older Canadians, with jobs, the Government of Canada invests $2.7 billion annually through labour market development agreements, labour market agreements, and labour market agreements for persons with disabilities. These federal transfers are in support of labour market programming that is delivered by provinces and territories.

Economic action plan 2013 announced that the Government of Canada will transform skills training through the introduction of the Canada jobs grant through the renewal of the labour market agreements with the provinces and territories in 2014-15.

The labour market agreements will be reformed to directly connect skills training with employers and jobs for Canadians with the Canada jobs grant. The labour market development agreements will also be renegotiated to reorient training toward labour market demand.

Finally, economic action plan 2013 also announced that the labour market agreement for persons with disabilities will be reformed to better meet the employment needs of Canadian businesses and also improve the employment prospects for persons with disabilities.

In order to ensure that older Canadians can work longer, the Government of Canada eliminated mandatory retirement for federally regulated employees in 2011. The government also removed disincentives to work and introduced flexibility to accommodate differences in work-to-retirement transitions through the pension system.

In 2008 the annual guaranteed income supplement earnings exemption was increased from $500 to $3,500, allowing low-income seniors who work to retain more of their GIS benefits before the benefit reduction applies.

Recent changes to the old age security program announced in budget 2012 will give workers the choice of deferring receipt of OAS pension for up to five years in order to receive a higher annual pension benefit. In addition, in 2009 the government reformed the Canada pension plan to better reflect how Canadians choose to live, work, and retire.

A number of changes are being phased in to provide greater flexibility for older workers, especially those who seek to combine income from employment and a pension. As a result, people are no longer required to reduce their earnings or stop working in order to start receiving an early CPP retirement pension. People who delay CPP receipt past the age of 65 will now receive a larger increase to their benefits. The post-retirement benefit was created, allowing working CPP retirement pension beneficiaries under the age of 70 to continue to contribute to the CPP in order to increase their retirement income.

Finally, the Government of Canada introduced changes to the tax rules to allow phased retirement arrangements under certain workplace pensions.

Recent Government of Canada consultations have revealed that older workers are valued by employers.

HRSDC continues to study measures that can help address labour market challenges faced by older Canadians and increase their labour market participation and employment.

The federal government cannot act alone, as it shares responsibility for labour market programs involving training with the provinces and territories.

In addition, the workplace also has a role to play. For example, the 2008 Survey of Older Workers found that flexible work arrangements could create an incentive for older workers to continue to work longer.

Additionally, the National Seniors Council, an advisory council established by the federal government, has also led consultations on the issue. Since 2011, the council has consulted a number of stakeholders on how to support the workforce participation and continued employment of older Canadians. These consultations highlighted the importance of engaging employers to promote the design of workplace policies and practices that meet the needs of an aging workforce.

We look forward to seeing the findings of the committee's study and the policy recommendations that will result.

Thank you.

[The Chair, Conservative, Ed Komarnicki]

Thank you very much for that presentation. Certainly, older workers would want more flexible arrangements, perhaps fewer hours and more getaway time if that were possible, so I can appreciate that.

We'll start our first round of questioning with Chris Charlton.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you, and I thank the witnesses very much for being with us this morning.

I have a number of questions in a bunch of different directions. Let me start first by making an observation.

It seems to me that when we're talking about older workers, we may want to divide our conversation into two separate groups of older workers. One, I would suggest, would be those who are ages 55 to 64 who, if they're losing employment, have a dramatically more difficult time in finding new employment or accessing skills training. The other would be perhaps those who are 65 and over who may well be seeking employment simply because they can't make ends meet on their public, private, or workplace pensions.

Let me start by asking a question about your presentation. On page 3 of the written document which is before us, the bullet reads, “The Government is also implementing measures that help promote the continued labour force participation of older Canadians by removing disincentives to work...”.

What disincentives to work are you removing?

[Yves Gingras]

In the introductory remarks, we stated a number of programs that are adjusted. There are adjustments that are brought in, for example, to some laws that remove the mandatory retirement in federally regulated fields. That is an area where there's more possibility for people to contribute longer.

When we're looking at the amount that people can earn and keep with them before they start losing some of the government benefits that they receive, like the guaranteed income supplement, the exemption used to be at $500 and now this has been increased to $3,500. This is an incentive for people to go and earn, knowing that they can keep more of the money that they earn.

These are some examples, and I named a few in my introductory remarks, that go in that direction. They may not be swift and very fundamental changes, but they are small changes that go in the direction of improving incentives or removing disincentives for people to stay longer.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Would you include raising the age of eligibility for OAS from 65 to 67 as having removed a disincentive?

[Yves Gingras]

This change was done mainly to ensure the sustainability of this program.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Really?

[Yves Gingras]

This is what has been done. Raising the age from 65 to 67 is to ensure that in the context of an aging population, we have a program that will be able to be run in a more sustainable manner, because we will have fewer people, fewer working-age Canadians, there to pay for the benefits that will be collected by more people who will not be active.

We're looking forward; this is planning for the long term. This is a change that will be implemented 10 years down the road. This is planning for the decades to come.

Nowadays, we have four working Canadians for every senior individual we have in our society. By 2030 this ratio will be down to two working-age Canadians to one senior in Canada. This is preparing for that new reality that we'll be facing in a few decades from now.

[Chris Charlton, NDP, Hamilton Mountain, ON]

I may have misunderstood, but all the actuarial evidence at the time that this change was announced actually suggested that the OAS was quite stable in actuarial terms and the actuarial forecast for a particular number of years.

I wonder if it might be appropriate for me to ask whether you could table the studies that you're referring to that show there was a financial need to do that.

Mr. Chair, how much time do I have? Do I have five minutes or seven?

[The Chair, Conservative, Ed Komarnicki]

You get seven and you're at 4:15 right now.

[Chris Charlton, NDP, Hamilton Mountain, ON]

All right, so let me just move along.

[The Chair, Conservative, Ed Komarnicki]

I'm not sure where you've gotten to in your questioning, but carry on if you wish and we'll come back to what it is you might want.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you very much.

I'll focus on folks between 55 and 64 for the purpose of the few minutes I've got left.

I know that in my hometown of Hamilton, for example, we've had mass layoffs in a number of industrial plants. You know that the manufacturing sector has been particularly hard hit in this country. In those instances, there used to be a program for older worker adjustment. It was a program designed to help older workers transition. That program is no longer in existence.

I wonder if you can tell me if there are any programs, currently, that offer the same kind of support. If not, why is that program no longer deemed necessary, given the current economic climate and given the numbers that you yourself have presented with respect to the difficulties older workers have?

[Catherine Demers, Director, Employment Programs and Partnerships, Department of Human Resources and Skills Development]

I believe you may have been referring to the program for older worker adjustment, POWA, which ended in 1997 and was meant as a bridge to retirement. It was a pilot program. It was actually a predecessor to the targeted initiative for older workers which followed that program. The reason it ended at the time was that, based on evaluation evidence, it was showing that it was not leading to very good outcomes, certainly not good employment outcomes for the participants, because it was really meant as a passive income support program and not as an active employment measure program.

[Chris Charlton, NDP, Hamilton Mountain, ON]

I'm sorry, because I have such limited time, I don't mean to be rude, but can I just ask about the targeted initiative for older workers? It provides training or provides help to access employment. Do you actually have statistics on the success of that program and would you be able to provided those to us?

[Catherine Demers]

Yes, we do. The program was evaluated. We have very good evidence showing that it has a positive impact on the employment outcomes of participants. Of those surveyed, 75% found employment after their participation.

[Chris Charlton, NDP, Hamilton Mountain, ON]

POWA was really designed to help the 25% who wouldn't have been able to succeed even under this program, right? So right now, for those 25% there is nothing; there is absolutely no support anymore. Am I right?

[The Chair, Conservative, Ed Komarnicki]

You're at the end of your time, but you can go ahead and conclude.

[Chris Charlton, NDP, Hamilton Mountain, ON]

You can just say yes.

[Voices]

Oh, oh!

[Catherine Demers]

There is support. POWA did not offer training. So there is support for those individuals. In fact, they can continue to participate in initiatives.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you.

[The Chair, Conservative, Ed Komarnicki]

Right now, just to be clear, Ms. Charlton, there was no agreement to supply whatever information you required. Were you requiring some additional information?

[Chris Charlton, NDP, Hamilton Mountain, ON]

I was just asking whether it would be possible to provide the information Mr. Gingras referred to with respect to the OAS.