Good afternoon, everyone. Thank you for this invitation.
I am sorry, but I have not prepared a presentation. So I will try to use the 10 minutes to give you a summary of the research on population aging I have conducted over the past 10 years. I may leave you more time for questions.
In 2004, I began working on the issue of population aging. I worked at the Strategic Policy and Management Branch of the Privy Council Office. I helped formulate the OECD recommendations. In 2006, I began another project on labour market flexibility, and I combined the two projects. A report was published by the Centre for Interuniversity Research in Analysis of Organizations, CIRANO. So I will try to summarize the results of that report for you.
When I began my research work on population aging, that issue had three aspects. I will try to briefly explain my contribution to the research projects on population aging.
The best known aspect of population aging is a declining birth rate, coupled with an increased life expectancy—a combination that increases the dependency rate. Fewer and fewer people will have to support a growing number of seniors. This aspect attracts the most attention owing to the impacts on health care spending and pension plan viability.
Another aspect of population aging—which we have been anticipating for years—is the mass retirement of baby boomers from the workforce. That underscores the labour shortage issue those mass retirements can lead to. There are questions on training, mobility and on the way to attract those older workers.
In this whole debate, the aspect that has received the least attention—and this is the aspect I have been studying—is employer response. We were able to analyze the offer thanks to data availability. We asked older workers what could motivate them to remain in the workforce longer. They said they were interested in working conditions and flexible working hours. The offer—in other words, ways to retain older workers—was given serious consideration.
In order to remove barriers and allow people to remain in the workforce longer, employers should also show commitment and implement practices that promote the retention of older workers.
I have looked at the least-studied aspect—which is referred to as the increase in the average age of the workforce. That aspect is not only related to aging. The population is now increasingly educated. People begin working later in their lives. Consequently, they continue working until a later age. Some immigrants begin their career later in life and will consequently retire later. That is all taking place in a service sector that promotes retention. That is why the average age of the workforce has increased. What is happening? This trend creates a pyramid or an imbalance in company workforce demographics. That means that there is a growing number of older workers. This will have an impact on payrolls and costs for employers.
Using data that matches up employers and employees, I tried to determine how companies were responding to that demographic composition of their workforce. How are companies responding to the increase in the number of older workers? They are responding in two ways.
Companies' first option is to use variable pay schemes, a form of wage flexibility—either through individual performance bonuses or team performance bonuses—in order to avoid seniority-based wages. That is a form of flexibility companies are trying to establish to manage their payrolls.
Another option is the use of part-time, temporary and self-employed workers. That is another form of flexibility—called numerical flexibility—that helps reduce payrolls.
It is clear that, as the proportion of older workers increases in a company, the use of part-time workers increases as well. We can say that part-time work is not a problem because, on the one hand, it helps companies adjust to a turbulent context and, on the other hand, it allows older workers to combine work and phased retirement, young people to combine work and studies, and women to combine work and family responsibilities. So it seems that flexibility is not a bad thing in itself and that it helps satisfy the needs of employees and employers.
However, when we consider it in a life-course perspective, over the long term, that flexibility can influence access to training and social benefits. It can also affect the accumulation of pension funds. Flexibility can have long-term consequences in those areas.
Therefore, I have come to the conclusion that there are two kinds of flexibility. Employers seek flexibility by using an increasingly flexible labour force composed of part-time, temporary and self-employed workers. However, that is not the kind of flexibility employees are looking for. They want flexibility in terms of working hours and working conditions. How can a balance be struck between those needs? That is the challenge in terms of public policies on labour.
The European experience shows that addressing that flexibility issue provides an opportunity not only for seniors, but also for the general population. I will give you an example. Older workers need flexibility, but young people are also increasingly seeking that flexibility, as are women. It is no longer so much an issue of work-family flexibility, but, above all, work-personal life flexibility. Greater focus should be placed on labour market transitions. In addition, we want to know what the effect of that flexibility is on labour market exclusion.
Let's take for example the transition from school to the labour market. If a policy aims to determine whether immigrants need certain qualifications to integrate the labour market, the risks or obstacles involved should be identified. If the problem stems from a lack of qualifications, our graduates also need that experience on the labour market to have a successful transition to the workforce. So the problem stems from a lack of labour market experience.
If we want to have a phased retirement policy to help older workers remain in the workforce, why not have the same policy for disabled people? Why not view partial retirement in the same way we view partial disability?
So the current challenge in public policy is to find a way to address risks instead of groups.
Our economy was in a context of labour shortage. All our programs and policies were implemented in that context. I am trying to elevate the debate. Employers want to retain workers. They have established defined benefit pension plans. The seniority principle was used to retain that labour force. Forced retirement was instituted, and it also helped employers get rid of employees whose performance was unsatisfactory. Mandatory retirement has been abolished so that interested workers can stay, but employers are sometimes stuck with certain employees. I have talked to chamber of commerce representatives. No one is saying this, but people don't want to keep all the workers. In addition, who will take charge of training?
The challenge still consists in considering that notion of flexibility, the demand for flexibility and the importance of training. It is a matter of figuring out how to address these issues in a broader context than that of population aging.
Thank you.