Thank you very much for inviting me.
I'll be following quite closely a written set of comments that I provided.
Page 2 of my comments says I am an economist, so I am going to focus my remarks on what I view as economic challenges. The topic is very broad, but I'll have to focus on that.
On page 3, starting at “Economic Challenges”, I identify six different points in particular.
First is that the aging of the population, increased longevity, and the oncoming tidal wave of retirements lead to a growing elderly dependency ratio, slower economic growth, increased fiscal burden for governments, and a greater retirement income risk for seniors. This has received a lot of the public attention in the media, so I'm not going to focus on that in my remarks. A lot has been said about it already.
Second, what I do want to emphasize, though, is that it's not just greater longevity; increased longevity is coming with a growing number of healthy years. This provides an opportunity and a challenge to enable people to work longer if they wish to. You can see the figures there of seniors' labour force participation rates for Canada for groups ages 55 and over. They were increasing until the mid-1990s. That was the “Freedom 55” period. Since then, they have been going up quite substantially.
This means we need to get incentives right and focus on flexibility, choice, and reducing barriers to entry for people who do wish to work. This isn't new to me. This is a major theme of the federal expert panel report that came out in 2008. If you haven't read it, I definitely recommend it.
This growing longevity of healthy years provides opportunities for seniors to make greater use of the gig economy: more flexible work hours, self-employment options, and technical advances, medical and otherwise, for things like mobility, eyesight, and hearing. It's fortuitous that people are working longer now, as opposed to 20 years ago, when there is much greater opportunity for fostering and accommodating it.
This is such a major point that a major special issue of The Economist last July—and I can give you specifics if you want them—identifies the need to think in terms of a whole new stage in life. We can think of them as early seniors, or what they call “owls”—“older, working less, and still earning”. If you want to complete the idea of highlighting the point that seniors are not a homogeneous group, you have the healthy people who are continuing to work like me—I'm a senior—and you have those who do have health problems. I might suggest complementing the idea of “owls” with later seniors called “elfs”, as in “elder folks needing support”. The support could be just a private pension, but it could also be support from the family, OAS, GIS, or whatever. The point is that seniors are not a homogeneous group. We have an increasing group who are really quite healthy, and the other group, who are living longer and for whom health and quality-of-life concerns are very important.
Third, median real incomes—“real” meaning adjusted for inflation—of seniors have advanced, but only slowly, since the early 1990s. Some numbers are given there in my comments. One of the main reasons they haven't advanced all that fast is that the median total incomes for adults as a whole have advanced even more slowly. The latter have gone up about 13% or 14% over this period, and for seniors they've gone up about twice that. However, there is a growing concern when you combine the rather slow growth of median earnings of seniors with the run-up of pharmacare costs, which are just going to continue increasing.
Fourth, low-income rates among seniors have risen considerably since the mid-1990s. That's Statistics Canada's way of saying “poverty rates”. Numbers are provided at the top of page 5 of my comments.
They decreased dramatically between the 1970s and the 1990s because of new things brought in, such as the CPP and things like that. Since then, they've been inching up, so now it's about the same as for people as a whole in the economy. There are a number of reasons we could talk about when time allows, but you should keep in mind that the low-income measure StatsCan uses is a relative measure of poverty: it's those with income below one-half of median income. Basically, what this says is not that the real median incomes of seniors are slipping; it's that they're not participating in the rising earnings elsewhere in the economy.
Point five is that in the long run, fallen age-earnings profiles will likely reduce the effectiveness of the CPP and QPP and will put a greater burden on OAS and the GIS.
Economists refer to an age-earnings profile. You start off earning relatively little. As you get older, it peaks around age 45 to 54 and then tails off a bit. What was found is that between about 1980 and 2000 the real income of the younger group fell by about 20%, and it hasn't gone up. Very tentative results for Canada and the United States suggest that they haven't been making up for it by growing it faster later in their careers. The whole age-earnings profile has shifted down. Since a major source of income for retirees and seniors is CPP or QPP, which is based on your earnings career, we should expect that pillar of retirement support to weaken and more weight to fall on OAS and GIS.
Do I have time for my sixth point?