HUMA Committee Report
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Mr. Phil McColeman, MP Dear Mr. McColeman, On behalf of the Government of Canada (hereafter, the Government), I am pleased to respond to the second report prepared by the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities (hereafter, the Committee) titled “Engaging Experience: Opportunities for Older Persons in the Workforce” (hereafter, the Report). Demographic changes such as declining fertility rates and longer life expectancies are contributing to population aging in Canada, and are expected to have a significant impact on employers, the labour market, and economic growth as a whole. Much of Canada’s economic growth in the past was attributed to the growth of its labour force. As mentioned in the Government’s 2014 Jobs Report: The State of the Canadian Labour Market, the shift toward an older population over the coming decades will reduce the share of Canadians who are available to work, which in the absence of improvements to productivity, may contribute to slower economic growth. As a result, the Committee’s study is timely since it will become increasingly important to increase the workforce participation of older Canadians, generally understood to be those aged 55 and older. Population aging also means that a larger proportion of Canadian workers are older and a significant number of these workers are approaching traditional retirement age. In 2011, the first of the baby-boomers began turning 65 years and the departure of these workers from the labour market may exacerbate the skills shortages that are being reported by employers in some regions and sectors of the economy. As mentioned in the Report, the labour market outcomes of older Canadians have improved significantly since the early-2000s. Indeed, over the past decade older Canadians have experienced the largest increases in labour force participation and employment rates compared to Canadians in other age groups. In particular, older women have made significant gains in their participation and employment rates, but there remains room for improvement as their outcomes still lag those of older men. Moreover, older Canadians have maintained relatively low levels of unemployment, as the 6.0% unemployment rate of persons aged 55 and older in 2013 was below the national average of 7.1%. In addition, evidence suggests that many older Canadians are delaying full-time retirement, and over half of workers between the ages of 50 and 75 plan to work part-time during their retirement years. These positive trends reflect the fact that Canada has a dynamic economy that presents many Canadians with an opportunity to contribute toward improving productivity and growth. These trends also reflect the fact that older Canadians today are living longer, healthier lives than their counterparts a few decades ago, prompting many to continue working to enjoy continued social interaction and financial gains. Furthermore, today’s older workers have higher levels of education than previous generations, making them a source of experienced labour that could help alleviate some skills shortages, helping to ensure Canada’s long-term prosperity. The Committee makes recommendations with respect to: assessing the impact that incentives to early retirement in public pensions has on workforce participation; promoting health among Canadians as they age; ensuring older Canadians can access the job-training they need to find work; raising awareness to recognize the contributions older workers make to businesses and ways to retain these workers; and, working with the Provinces and Territories to promote flexible workplaces. The Government supports this approach and, through its agenda to create jobs and economic growth and support healthy families and communities, has taken actions that are well-aligned with the Committee’s recommendations. Allow me to outline in greater detail some of the measures the Government has put in place to help unemployed older workers find new jobs and reduce barriers to their continued participation in the workforce, as well as promote healthy and active lifestyles among older Canadians. Firstly, the Government has implemented several programs to encourage the re-entry of unemployed older Canadians in the workforce and the retention of existing older workers by providing support for training and employment services, by providing incentives for older workers to remain in the workforce, and by engaging key partners to promote age-friendly and accommodating workplaces. Supporting Training for Unemployed Older Workers: While today’s older workers are experiencing relatively low levels of unemployment, when they do suffer a job loss they are more likely to be unemployed for longer periods of time, which increases the risk of them leaving the workforce and retiring earlier than planned. In addition, as the economy continues to recover from the recession, employers in certain regions and sectors are reporting skills mismatches along with labour and skills shortages. It is becoming increasingly important to not only keep older Canadians who wish to work in the workforce, but also to integrate demand-driven approaches into job training programs. The Government is committed to transforming its training system to help Canadians, including older persons, acquire the skills they need to find new jobs while ensuring employers have access to workers who have the skills they need to grow their businesses. As such, the Government has implemented several measures to support unemployed older Canadians to help them reintegrate into the workforce. Since 2006, the Government has invested $270 million in the Targeted Initiative for Older Workers (TIOW) in order to assist unemployed older workers living in smaller, vulnerable communities that are experiencing significant downsizing or closures and/or persistent high unemployment with their reintegration into employment. While this federal-provincial/territorial cost-shared initiative focuses support on unemployed older Canadians aged 55 to 64, workers aged 50 to 54 and those aged 65 and over who have similar needs may also be eligible for TIOW. Since TIOW’s launch, the program has helped over 32,000 unemployed older workers in communities across Canada. As recommended by the Committee, the 2014 Economic Action Plan announced that the Government is renewing TIOW for a three year period, representing a federal investment of $75 million over the next three years. The Government will also make the program available to more communities and more unemployed older workers by expanding eligibility to small communities experiencing unfulfilled employer demand and/or skills mismatches, so that communities with tighter labour markets that did not meet previous criteria will now be able to participate. In total, it is estimated that by 2017 the overall federal investment in TIOW will total over $345 million. The Government also provides almost $2.7 billion a year in transfers to the Provinces and Territories through the Labour Market Agreements (LMAs), Labour Market Development Agreements (LMDAs), and Labour Market Agreements for Persons with Disabilities (LMAPD), which support skills development and employment services designed and delivered by Provinces and Territories. Older Canadians are eligible to access job training and obtain employment services through these agreements. For example, the 2013 evaluation of the LMAs found that 14% of LMA participants were older Canadians aged 55 and older. In addition, older Canadians now account for a greater share of LMDA participants, as their share increased to reach a 10-year high of 10.2% in 2011-12. The Economic Action Plan 2013 announced the Government’s intention to renew and transform the LMAs with continued investments of $500 million per year for six years, a commitment that was reaffirmed in Economic Action Plan 2014. The LMAs will be transformed by introducing the Canada Job Grant (CJG) to directly connect skills training with employers, helping to ensure Canadians are developing the skills required for available jobs. The CJG will provide up to $15,000 per person towards eligible training that will be cost-shared with employers. In addition, a portion of funding will continue to be transferred under the renewed LMAs to support a broad range of employment programs and services, similar to those they currently offer. Provinces and Territories will continue to be able to use the CJG and other programming under the renewed LMAs to target specific client segments, including older Canadians, based on local labour market needs. The Government is also transforming other labour market transfers to ensure Canadians, including older Canadians, obtain the skills they need for jobs in high-demand fields. As part of this transformation, the Government will renegotiate LMDAs with Provinces and Territories, as well as introduce a new generation of LMAPDs, which will be more responsive to employer and labour market needs. Accordingly, the Government announced in Economic Action Plan 2013 that it will provide $222 million annually over five years to renew LMAPDs, which will engage employers and disability community organizations to help establish program priorities to better meet the needs of persons with disabilities, including older Canadians with disabilities. Supporting Job Search Services for Older Workers: Older Canadians can face unique barriers to labour market re-entry after a job loss. To support education and training decisions and career transitions, the Government of Canada is enhancing the Job Bank website – Jobbank.gc.ca. This site is Canada’s primary location for learning and labour market information, providing occupation and location specific information on current job opportunities. The site also provides information and tools to help employers find and hire the workers they need, including older workers. In support of this initiative, Economic Action Plan 2014 invested $11.8 million over two years and $3.3 million per year ongoing to launch an enhanced Job Matching Service to ensure that Canadians are given the first chance at available jobs that match their skills in their local area. Complementing the work of Job Bank, and to further help older Canadians find jobsthat match their skills, the Government of Canada supports the ThirdQuarter project which provides an online job forum that helps experienced older workers find a job that matches their skills and helps employers find workers with the skills and competencies they need. As of November 30, 2013, the site had over 21,000 registered older workers and over 3,200 registered firms. Economic Action Plan 2012 provided $6 million over three years to extend and expand the ThirdQuarter project to key centres across the country. Through this project, outreach activities are undertaken with employers that highlight the important contributions that older workers make in the workplace. Allowing Workers to Remain in the Workforce Longer: Canadians are living longer, healthier lives and this is creating greater opportunities for employment later in life. Several witnesses called before the Committee maintained that some public pension and tax rules may create a disincentive for older workers to stay in the labour market, prompting some to leave their jobs earlier than they otherwise would have. In order to improve work and saving incentives for older workers, the Government has made changes to public pensions and enhanced the tax rules related to private pensions and retirement savings. In 2008, the Government increased the maximum annual Guaranteed Income Supplement (GIS) earnings exemption from $500 to $3,500, thereby reducing disincentives to work for low-income seniors. This allows GIS recipients who choose to work to keep more of their hard-earned money without any reduction to their GIS benefits. This represents a federal investment of $60 million per year. In 2009 the federal, provincial, and territorial Ministers of Finance agreed to a number of changes to the Canada Pension Plan (CPP) in order to ensure the CPP better reflects the way Canadians live, work and retire. Accordingly, the Government made changes to the CPP to ensure it remains fair and flexible so it is able to respond to the changing needs of the Canadian workforce, particularly with respect to those Canadian workers who seek to combine income from work and pensions. As a result of these changes, people are no longer required to stop working in order to start receiving an early CPP retirement pension, giving workers flexibility by permitting them to continue working when they start to receive their CPP retirement pension. To ensure actuarial fairness, older Canadians who delay CPP receipt past the age of 65 will now receive a larger permanent increase to their retirement pension benefits, while those who retire between the ages of 60 and 65 will experience a reduction in their pension benefits. For example, by 2016, if older Canadians choose to receive their CPP retirement pensions at the age of 70 their monthly pension amount will be 42% higher than if they had started receiving it at 65, which compares to an increase of 30% under previous rules. Alternatively, if older Canadians choose to receive CPP at age 60 their monthly pension amount will be 36% lower, compared to a decrease of 30% previously. Furthermore, the Government of Canada, along with provincial governments, created the Post-Retirement Benefit to allow CPP retirement pension recipients who keep working between ages 60 and 70 to make contributions that will increase their retirement income. These CPP changes are being phased-in gradually from 2011 to 2016. As a result of these changes, the CPP is increasingly helping to facilitate flexible transitions from work to retirement. As part of the Economic Action Plan 2012, the Government announced that it would improve flexibility and choice in the Old Age Security (OAS) program by allowing the voluntary deferral of the OAS pension for up to five years, giving Canadians the option of deferring the take-up of their OAS pension to a later time and receiving a higher, actuarially adjusted, annual pension. As of July 1, 2013, older Canadians may choose this voluntary deferral option, giving them the choice of waiting until as late as the age of 70 to start collecting the OAS pension and increasing their OAS pension by up to a maximum of 36%. By 2030, the Chief Actuary estimates that over half a million OAS clients will have chosen to receive a larger pension as a result of this option. In addition to providing incentives for workers to stay at work longer through changes to public pension plans, the Government introduced changes to the tax rules to improve work and saving incentives for older Canadians. In 2007, the Government increased the age limit for converting a Registered Retirement Savings Plan (RRSP) to a Registered Retirement Income Fund (RRIF) and for commencing pension payments from a Registered Pension Plan (RPP) from 69 to 71. This change gives older Canadians the opportunity to choose to continue working and saving for a longer period of time. To help employers better retain older workers and manage succession planning pressures, in 2007 the Government also introduced changes to the tax rules to permit more flexible phased retirement arrangements under a defined-benefit RPP by allowing workers to receive a partial pension from the plan while at the same time continuing to accrue further benefits under the plan. The Government also took significant steps towards protecting older Canadians who choose to continue their careers by eliminating mandatory retirement among federally regulated employees. Through Economic Action Plan 2011 the Government of Canada introduced amendments to the Canadian Human Rights Act, which remove provisions that allow mandatory retirement, and the Canada Labour Code, which ensure that workers receive severance pay upon involuntary termination regardless of pension eligibility. Working with Stakeholders to Raise Awareness of the Contribution of Older Workers: The Government created the National Seniors Council in 2007, to conduct research and advise the Minister of Health, the Minister of State for Seniors, and myself on emerging issues and opportunities that affect the quality of life of older Canadians. In recent years, the National Seniors Council has engaged older workers, employers, academics and other stakeholders on several occasions to develop a better understanding of the labour market outcomes and challenges facing older Canadians. In March 2013, the Council’s hard work resulted in the publication of a report entitled Older Workers at Risk of Withdrawing from the Labour Force or Becoming Unemployed: Employers’ Views on How to Retain and Attract Older Workers. Furthermore, in 2011 the Government engaged older workers and employers in order to better understand the challenges facing older Canadians in the workforce. This work led to the publication of a report entitled HRSDC Consultations with Employers and Older Workers: Summary of What we Heard. Consultations and reports like these have helped raise awareness of the important contributions that older workers make to Canadian businesses and our economy, and have highlighted some workplace practices that could help employers retain older employees and reduce early retirement, such as flexible workplace arrangements like phased-retirement and physical accommodations. In addition, in 2012 the Government launched the Panel on the Labour Market Opportunities for Persons with Disabilities. The Panel created awareness among employers by engaging and consulting a wide variety of Canadian businesses from different sectors. In January 2013, the Panel released a report entitled Rethinking DisAbility in the Private Sector, which made the case that hiring and retaining persons with disabilities, including older workers who age into disability, is good for business and that, with proper accommodations, employers can experience many benefits such as reduced turnover which results in lower training costs. This report also highlighted the fact that as the workforce ages, employers recognize that more accommodations will be needed in the workplace, in order to retain employees. Building on the Panel’s good work and to continue to create awareness among employers, the Government is supporting the creation of a forum established by Canadian business leaders called Canadian Business SenseAbility. This forum will facilitate training and information sharing among businesses on resources and best practices to increase the workforce participation of Canadians with disabilities, including older workers. Similarly, Economic Action Plan 2014 launched the Canadian Employers for Caregivers Plan, which will create an employer panel to engage Canadian businesses and employers about cost-effective solutions that will help maximize the workforce participation of working caregivers, including older workers who must balance work with care responsibilities. Working with Provincial and Territorial Partners to Promote Older Worker Retention: The federal, provincial, and territorial governments work together through the Forum of Federal-Provincial-Territorial Ministers Responsible for Seniors, which was established to share information, discuss new and emerging trends related to older Canadians and seniors, and work collaboratively on projects. In 2012, this Forum developed and approved Age-Friendly Workplace resources including an information booklet, a self-assessment checklist, and a workplace charter to inform employers about the benefits of recruiting and retaining older workers. These practical information resources are available to employers, older Canadians, and other interested stakeholders, through the Government of Canada’s Seniors.gc.ca website. Through this collaborative work the Federal-Provincial-Territorial Ministers Responsible for Seniors have encouraged the creation of inter-generational workplaces and raised awareness about workplace practices that help retain older workers in the labour market. The Forum of Federal-Provincial/Territorial Ministers responsible for Social Services, created in 1996 to promote inter-jurisdictional discussion and cooperation on social services issues, currently focusses on persons with disabilities, children and youth at risk, and poverty. Furthermore, the Forum promotes discussion and engagement on issues affecting labour market opportunities for persons with disabilities, and facilitates research and the sharing of best-practices to increase opportunities for, and reduce barriers to, employment. In addition, the Forum for Labour Market Ministers allows Provinces, Territories and the Federal government to share labour market information and discuss key issues, as well as programs and policies related to the Canadian labour market. As responsibility for labour market and labour affairs is shared between the federal, provincial and territorial governments, the departments responsible for labour from each jurisdiction have developed mechanisms for sharing information and best practices, including the Canadian Association of Administrators for Labour Legislation (CAALL). Through CAALL the Government of Canada will continue to engage with its provincial and territorial counterparts on topics of mutual interest, including the aging workforce, and emerging trends that may impact labour relations and occupational health and safety. Secondly, the Government has taken several measures to support the retention of older Canadians who wish to participate in the labour market by providing information to help them live healthy and active lifestyles. Promoting Health and Active Workforce Participation as Canadians Age: There are several factors that older workers consider when deciding whether to continue working or to retire, one of which is health. The state of one’s personal health has a significant impact on workforce participation, as research has shown that chronic diseases, disabilities, and injuries related to physically demanding work, increase the risk of early retirement. The Government recognizes the importance of engaging multiple sectors and stakeholders to promote good health to ensure that Canadians remain active and healthy, including later in life. To this end, the Government is working with the Provinces, Territories and stakeholders on initiatives that address inequalities to improve the physical and mental health of Canadians and to support active and healthy aging. Through the Age-Friendly Communities initiative the federal and provincial governments are working together to help create an environment where policies and services are designed to support and enable older people to enjoy good health, participate actively, and live in security in over 900 communities across Canada. The Government also supports research on healthy aging and a wide range of conditions associated with aging. Through its Institute of Aging, the Canadian Institutes of Health Research (CIHR) is working with stakeholders to increase our knowledge of aging in order to help address the challenges facing Canada’s aging population. Since 2006, the Government of Canada has invested over $760 million to support research related to the mandate of the Institute of Aging. In its 2013-2018 strategic plan called “Living Longer, Living Better”, CIHR’s Institute of Aging committed to develop knowledge on the organizational and physical factors that make work environments healthy for older adults. CIHR is also leading a Pan-Canadian Initiative called the Canadian Longitudinal Study on Aging that will help us better understand the aging process and shape the way we age. This study will also help decision-makers to examine healthy aging through a number of different lenses, which will in turn help improve health policies and inform government programs and services. Finally, CIHR and its partners are working together on a new research initiative to better understand the barriers to workforce participation of Canadians as they age. In closing, I believe that this response will help reassure the Committee that the Government will continue to promote the participation of older Canadians in the workforce, as their contribution to the labour market and towards securing our economic future is invaluable. I would like to commend you and the members of the Committee for their hard work, and extend my appreciation to the witnesses who appeared before the Committee. Sincerely,
The Hon. Jason Kenney, P.C., M.P. |