Thank you very much.
On behalf of the Canadian Chamber of Commerce, I am pleased to be here. My name is Sarah Anson-Cartwright, and I'm director of skills policy.
Two and a half years ago, the Canadian Chamber called on Canada to address its aging workforce. Our report was titled, “Canada's Demographic Crunch: Can underrepresented workers save us?” The reality is, we're facing a huge expected exodus from the workforce over the coming decade. Some sectors will be especially hard hit. Several large companies have told us that up to one-third of their employees will be eligible to retire within three to five years' time.
In 2011, we issued a policy brief called “Incenting Seniors To Continue Working”, and it offered a range of recommendations, such as pension reforms. Last year our report on Canada's skills crisis highlighted how employers are confronting skills shortages in the face of impending retirements. In short, the Canadian Chamber has been shining the spotlight on older workers and the need to keep them in the workforce as much as possible. I'd like to share today some comments on how employers are retaining older workers and the role of training and continuous learning. I will also mention pension reforms and tax policy to encourage people to continue working.
Older workers have been faring well in the labour market. Last year, the segment of the population aged 55 years and over posted the largest increase in employment. By far the largest increase of all demographic groups was among older women, whose employment surged 5.8% in 2012. Older men fared well too, with their employment levels jumping 4.3%.
Canadians are living longer and healthier lives than ever. This, coupled with the availability of more flexible work arrangements, leaves many older workers with not only the mental and physical capabilities to continue working, but also with the desire and the means. A multi-generational workplace can be immensely valuable to a business. The mature worker provides the knowledge, experience, and history, and the younger generation provides technical expertise.
Business can encourage older workers to remain in the labour force. Employers' interests in older workers are twofold: first, to tap into a pool of potentially available workers, and, second, to benefit from the skills of existing older employees for a longer period, including the opportunity for knowledge transfer between experienced and younger workers.
Older workers want flexibility in their work schedules, according to survey findings in Canada. Business can implement innovative, firm-based work arrangements that are more suited to older workers' lifestyle needs. Flexible work arrangements, such as part-time or part-year schedules, flexible working hours, compressed work weeks, job sharing, telecommuting, home-sourcing, i.e. working from home, and contract work can be valuable tactics to increasing labour force participation.
The Canadian Chamber surveyed chamber members last year, and 84% of the respondents were small businesses. There were 49% of them who said they would allow staff to work part-time or reduced hours as a way of retaining older workers on staff.
Connecting older workers to new job opportunities is the goal of ThirdQuarter. This program originated out of the Manitoba Chambers of Commerce and is now being extended to communities elsewhere in the country as a result of increased federal funding. It is an online service with a hands-on approach for this demographic group that is aimed at better matching skills to jobs.
To keep older workers engaged, they may need to learn to keep learning on the job and as they extend their working lives. Many jobs have changed considerably as a result of technology. Employer-supported training for older workers has been increasing since 1991. More older workers received or participated in employer-funded training in 2008, as compared to 1991 and 1993, according to Statistics Canada.
If long-tenured workers lose their jobs, they may need to find new employment. If those workers have low educational attainment, they may need literacy, numeracy, and other essential skills training before they can retrain for another job.
Community colleges can play important roles in combining technical training with essential skills training. This is part of our skills challenge that needs ongoing attention by government.
Many people may need or want to work longer. The pension and tax systems should not penalize them when they do so. The Canadian Chamber supports the recent measures by government to allow those collecting CPP to have their benefits continue uninterrupted if they continue to work.
We also support changes to the OAS program, which will go into effect in July of this year, that allow for the voluntary deferral of OAS pension for up to five years. This will allow Canadians to receive a higher actuarially adjusted annual pension at a later time, making it more attractive for seniors to work longer.
Similarly, the enhancement in the actuarial bonus when CPP benefits are delayed past age 60 removes the previously strong financial incentive to retire early.
We also need to look at Canada's tax system, and in particular marginal effective tax rates, which influence a person's decision to participate in the labour market and the choice between working more and taking more leisure time.
Income-tested tax credits provided to seniors deliver financial benefits, but as these families' incomes rise past prescribed thresholds, many of the public transfers they receive are clawed back. The guaranteed income supplement, for example, contains a clawback provision by which each additional dollar of earnings reduces the benefit received under the program by 50¢. This creates a strong disincentive for seniors to work, because each additional dollar of earned income is effectively taxed back at a rate of 50%.
Canada is now confronting the combination of retirements and skills shortages in our economy. We need to retain and equip every worker with the right incentives and skills to stay employed and productive in the workforce. By focusing on specific, concrete actions by both government and the business community, we can encourage older workers to remain in the labour force and contribute to our prosperity.
I welcome your comments and questions.
Thank you.