In common with most industrialized countries, Canada’s population is aging at an accelerating pace due to lower fertility rates and longer life expectancies. The combined effect is transforming population structures across Canada (and many other countries). As populations age, countries will have to rely more heavily on productivity growth and increased labour force participation from underrepresented groups to maintain living standards and provide tax revenues to pay for public services.
Workers who are 55 years and above – considered to be in their “golden age”—are one of the groups underrepresented in the labour market. PricewaterhouseCoopers recently produced the 2018 iteration of the firm’s Golden Age Index to quantify how well different OECD countries are doing in harnessing the talent of older workers. The Index assesses the impact of older workers on various aspects of the labour market, including employment, earnings, the gender gap and participation in training. PwC estimates that as much as $3.5 trillion could be added to the combined GDP of the advanced economies by encouraging more people at or nearing retirement age to stay in the workforce.
Source: PwC Golden Age Index.
Overall, the Index shows an upward trend in the number of older individuals remaining in work. Iceland tops the Index with 84% of the 55-64 age range employed, compared with the OECD average of 60%. New Zealand was second (78%), and Israel (66.8%) took third place. Germany, Israel and New Zealand showed the biggest improvements, with all climbing in the Index since 2003. At the opposite side of the scale are Luxembourg with 40% of the same age group employed, Greece with 37%, and lastly Turkey with 34%. Canada is in the middle of the pack, coming in 18th out of the 35 countries examined. To note, Canada has dropped in the rankings from its 2015 position.
PwC Golden Age Index: Key Results
|Source: PwC Golden Age Index.
Incentives to keep older workers in the labour force
So, what motivates people to work past the “traditional” retirement age? The evidence suggests that a mix of personal circumstances/preferences and policy factors can explain the high employment rate among older workers in the top performing countries. The Golden Age Index identifies policies and practices that support continued workforce attachment in the highest-ranking economies:
1. Increasing the retirement age
Top performers in the Index have opted to keep people in the workforce longer by increasing the retirement age. Not only does this bolster government tax revenues, but it also helps retain the knowledge and experience of older workers a little longer.
2. Further training and support for older workers
Top performers in the Index also adopted measures to support workers with on-going professional development and retraining programmes. Twinning this with an increased retirement age likely accounts for higher employment rates among “golden age” workers in some countries, as life-long learning is critical to facilitate the skills needed for longer careers. Looking ahead, there is strong evidence that the ongoing digital disruption will be skill-biased, so that low-skill and low-wage workers are at the highest risk of automation. Adapting to the digital economy may be harder for some aging workers. Providing incentives for on-the-job tech training, upskilling and professional development can help to keep older workers in the labour force.
3. Flexible working arrangements
According to the Index, one of the primary reasons that older people opt-out of work is inflexible work arrangements. Making work options more flexible is another means to encourage longer careers. This can be done by increasing opportunities for part-time, contract or temporary jobs, as well as by offering partial retirement options.
Embracing the Golden Age
Looking ahead, older workers can be expected to have an even larger presence in the Canadian work force as the 55+ population continues to swell. Top marks on the Golden Age Index go to countries that have put policy measures in place and implemented workplace practices that make work more attractive to the 55+ age group. Canada’s middling performance in the Index suggests there is more that employers and policy-makers here can do to increase flexibility and expand labour force participation among older adults.