The Number One answer to Canada's impending skills shortage is delayed retirement of its aging workforce, a major new report says.

Increased immigration should not be the primary method of meeting the country's labour force demands, according to the report from the Conference Board of Canada. Instead, it recommends that rather than viewing its aging population as a liability-Canada must maximize opportunities to use the skills and experience of older workers by encouraging later retirement.

"A more successful and increasingly popular approach to buffer the effects of an aging population involves labour-market programs to increase the supply of and demand for older workers," says the 183-page report, Performance and Potential 2005-06: The World and Canada: Trends Shaping our Future. "Several types of measures are central to this approach: reducing incentives for early retirement, encouraging later and more flexible retirement, passing legislation to counter age discrimination, and helping older workers find and keep jobs."

Canadians retire early
Increasing immigration to one percent of the population each year a stated goal of the federal government-will not meet the demand. The answer is postponing retirement.
"After 2010, the baby boomers will begin to retire and by 2025, 20.4 percent of the population will be over age 65-double the share in 1980...there will be fewer people in the active labour force to support the retiring baby boomers," the report says, adding that public and organizational policies and practices must begin to change now to offset the economic and social repercussions of an aging society. Keeping older workers in the workforce is one effective way of dealing with those labour shortages.
"Canada runs the risk of squandering its abundant endowments and opportunities," Anne Golden, president and CEO of the Conference Board said in releasing the think-tank's 10th annual report on the country's economic well-being. "Canada's relative performance continues to slip and other countries are not standing still."

Fifteen-point strategy
A coherent national strategy is needed to motivate older people to keep working and to motivate employers to retain and hire older workers, the Conference Board said. It sets out 15 recommendations for action. Among them:

• Increase the eligibility age for government pension plans. Citing conclusions of the chief actuary of Canada, the Conference Board says the current system is too generous to retirees who begin collecting between 60 and 65 and penalizes people who continue working past 65.
• Combat ageism in the workplace. "In most countries, there are deeply ingrained biases against older workers, and dispelling them is not easy."
• Pass laws to eliminate mandatory retirement
• Reduce unemployment and disability benefits to prevent workers from using social security programs as a route to early retirement
• Provide better adult education and training to enhance older workers' employability Establish flexible work arrangements to accommodate older workers' health
• Help older workers find jobs through specific government employment services
• Offer subsidies to employers who hire and retain older workers, offsetting higher salaries often commanded by older workers compared with younger ones

The report points out that in 1976 the average retirement age was 65. In 1998, the figure dropped to 61 and now stands at between 61 and 62. But in terms of longevity scale, Canadians rank high among developed nations, it says.

Other countries initiatives
The report lists Japan, Sweden, the United Kingdom and Finland as countries offering the best examples of coherent, nationwide strategies to keep older workers in the labour force. Each has developed an integrated framework to remove both 'demand-side barriers' that discourage organizations from hiring older people and 'supply-side barriers' that discourage older people from continuing to work.

The United States prohibited age discrimination in the workplace in 1967 and eliminated mandatory retirement in 1986. It also passed laws that significantly improve employment rates of older Americans. By 2006, countries belonging to the European Union will be required to pass legislation prohibiting age discrimination in the workplace.

But the report acknowledges that legislation can change attitudes only if accompanied by policies that educate both employers and older workers about their obligations and their rights. It also notes that in many countries "there are ingrained biases against older workers and dispelling them is not easy."

Removing barriers to older workers
Many governments have responded with subsidies for employers who hire or retain older workers. Encouraging older people to remain employed is also a challenge, the report says, listing financial disincentives, skills issues and workplace conditions as frequent barriers.

Governments can replace generous pension systems that encourage early retirement with financial incentives to stay on the job. Older workers also may need a less physically and psychologically demanding workplace. The report points out other countries have taken steps to upgrade and update the skills of older people.

"Given the rapid obsolescence of older workers' skills and employers' preference to train and develop young workers, European governments have overhauled their approaches to adult education and training to enhance older workers' employability." In addition, governments can help older workers from becoming discouraged by providing active employment services that help minimize the duration of unemployment following jobs loss. "Given the time lags involved, Canadian policy-makers and organizations must act now," the report concludes. "We have, at most, another 10 years before the accelerating aging of the population begins to undermine economic performance and social well-being."