Labout market inclusion and extension of older workers
The economic prosperity, which is helping Canadians sustain a high standard of living, is being threatened by diminishing skill stocks due to the aging of baby boomers, rising retirement rates and slow population growth (Expert Panel on Older Workers, 2008). To sustain growth in productivity the “economic output must be achieved by a smaller and older workforce” (Prskawetz, Fent, Guest, n.d. p. 1). Research also indicates that the entry of young people into the workforce is being delayed because they are taking much longer to complete their education and training (McMullin, J.A.; Cooke, 2004). Estimates suggest that 20% of the Canadian population will be over the age of 65 by 2015. Others project that by 2031, 25% of the population will be over the age of 65. It is also anticipated that the labour force participation rate will drop to 57% in 2025 as a result of the aging workforce (McMullin, J. A.; Tomchick., n.d.). The ratio of workers to retirees is expected to be two-to-one by 2031. People tend to retire earlier in spite of the fact that they are living longer due to continuing medical advances. For example, it is estimated that Canadians may now live a healthy life two or more decades after retirement; however, the average retirement age in Canada is 62 (Canadian Broadcasting Corporation, 2008).
Due to the economic uncertainty, Canadians appear to be giving second thought to retirement. A recent survey conducted by Sun Life reveled that “Canadians expecting to be retired at age 66 declines by almost 50 per cent in five years” (Sun Life Financial, 2013, p. 1), due to the fear of outliving their retirement savings. There are growing concerns among policy makers regarding the dependency ratio of the aging population and governments’ ability to sustain the social safety net as life expectancy continues to grow in industrialized countries (Ghosheh, N.; Lee, S.; McCann, 2006). Human Resources and Skills Development Canada (HRSDC) estimates that in the next 10 years, two out of every three job openings will be attributed to the aging workforce (Standing Committee on Human Resources Social Development and the Status of Persons with Disabilities, 2008). A consensus is also emerging among government and industry leaders that skill shortages will intensify and become more widespread, due to the aging of the Canadian workforce (Government of Canada, 2008). There is also a widespread recognition that immigration, Canada’s traditional source of labour, will have limited impact in offsetting the labour force deficit because of the worldwide competition for talent (Expert Panel on Older Workers, 2008; Human Resources Professionals Association of Ontario, 2007). Several countries are taking bold steps to address the population aging issues, by extending working lives and postponing the labour market exit of older workers.
Across the G7 countries there has been a wave of reforms to remove disincentives to early labour market exit, to combat the labour market exclusion and to promote inclusion and participation of older workers. These reform efforts have primarily targeted aspects of pension plans and social assistance, which tend to encourage early withdrawal from work life. The most common changes include increasing the age of eligibility and introducing penalties for earlier retirement. On the other hand, a whole range of incentives has been introduced to promote labour market extension beyond normal retirement age, by enabling retired employees who are working full-time or part-time to contribute to their pension plans. Most G7 countries have also abolished a mandatory retirement age. Various legislations are also being enacted to ban age discrimination. Canada has implemented some of these reforms and the implementation of others is under consideration (WDM-Consultants, 2011).
The trend toward ‘Freedom 55’ seems to be wearing down as a growing number of Canadians are becoming uncertain about their economic future during their retirement years. However, research indicating that two-thirds of older Canadian workers intend to work past retirement age may be overestimating the potential pool of older workers. Approximately one third of older workers end their work lives due to illnesses or disabilities; another third retire from work and are simply not interested in maintaining any form of labour market attachment. It is the remaining third that constitutes the estimated potential pool of older workers who are fit and willing to work beyond normal retirement age (WDM-Consultants, 2011).
There are some major employer barriers that act as impediments to the hiring and retention of older workers and that also push the workers to sever their labour market attachment earlier. The most notable of these barriers include: discriminatory employment practices, discriminatory re-employment practices, the generalized perception that older workers earn more and are less productive than younger workers, intergenerational divide at the workplace, and company policy restricting the rehire of retired workers (WDM-Consultants, 2011).
There are various employee barriers impinging on the labour market extension of older workers. Human capital deficiencies encapsulate three main employee barriers, namely: skills and learning deficiencies, deficiencies in workability, and some personal issues that are not conducive to labour market integration and extension. In spite of various initiatives for promoting lifelong and life-wide learning, older workers have little access to workplace training to learn new skills and to continuously improve acquired skills. Even when they have access to training, they may lack the information-processing skills to fully benefit from the opportunity (WDM-Consultants, 2011). The OECD has identified this problem as being a major challenge that needs to be overcome in order to facilitate the labour inclusion and extension of adult workers:
“Rapid societal change is…increasingly requiring older adults to acquire and use complex information with new technologies, not just in the workplace but also in many aspects of home and everyday life. These requirements can pose considerable challenges to older adults faced with declining sensory, perceptual, and cognitive abilities as they aged. Consequently, there are compelling reasons for understanding the effects of aging on adult learning, both from psychological and educational perspectives and from the point of view of the underlying brain mechanisms that support cognition and learning” (OECD, 2007, p. 212).
According to Camusso, although many people who enter the world of work have the necessary capacity to successfully adapt to workplace requirements, their cognitive skills may decay over time, resulting in a decline in their ability to adapt to changes. It is important therefore to give adult workers the opportunity to develop and hone their cognitive skills (Camusso, 2001).
The modern workplace has been altered significantly by automation and computerization. Many physical job tasks have disappeared and have been replaced by cognitive tasks that involve the transmission and processing of information from a computer screen or a numerical control system. As the job tasks become more complex and mental, the requirements for sound basic essential skills are also becoming more stringent. However, a significant proportion of adult workers lack the basic literacy and numeracy skills to successfully cope with their job requirements. The reorganization of labour is a third factor that significantly affects skills requirement. Specialized job roles are being replaced by a variety of job tasks performed within autonomous production teams. This new work environment calls for versatility and autonomy (Camusso, 2001).
Research has shown that workers need to deploy complex information processing skills and meta-cognitive strategies for solving problems in technology rich environment (Chinien & Boutin, 2011). Hong and Liu identified three types of meta-cognitive strategies that may be deployed by computer game players. Following is a brief description of each:
- Trial-and-error thinking: Players determine problem attributes through trial-and error tactics, and make no attempts to reflect and revise their thinking process;
- Heuristic thinking: Players apply experience gained form trial-and error mode to avoid repeating the same mistake; and
- Analogical thinking: Players solve problems through an analytical mental process (Hong, Hwang, Tam, Lai, & Liu, 2012)