Older Workers At Risk of Withdrawing from the Labour Force or Becoming Unemployed: Employers' views on how to retain and attract older workers

Setting the Context:

Overview of Key Populations of Older Workers At Risk of Withdrawing from the Workforce or Becoming Unemployed

Older Canadians are an important source of labour supply. Governments and workforce experts agree that the labour force participation of older workers will be essential for future economic prosperity.

However, it is important to note that not all older workers are the same. There are some key populations of older workers who face challenges and barriers that may put them at greater risk of withdrawing from the workforce or becoming unemployed in comparison to older adults in general. These include, but are not limited to:

• Displaced older workers (e.g., job loss related to layoff, plant closure, downsizing);
• Older workers with chronic, prolonged or episodic illness, injuries, mental health issues, or disabilities;
• Low-skilled and low-literacy older workers;
• Recent immigrant older workers;
• Older Aboriginal workers; and
• Older workers with family caregiving responsibilities.

Some of the barriers and challenges that these groups of older adults face include:

• Lack of re-employment opportunities;
• Low skill levels or skills specific to a former company or industry;
• Lack of job search skills;
• Lack of self-esteem or self-confidence to find a new job;
• Inability or reluctance to relocate;
• Difficulty obtaining flexible work arrangements and workplace accommodations; and
• Discrimination/stigma in the work place, including ageism.Footnote 13 

Given the focus of this year’s priority, the following section provides an overview on key populations of at-risk older workers and the specific challenges these groups face in participating in the workforce. This section also describes how consulted employers define the term “at-risk”.

Displaced Older Workers

Older Canadians who lose their jobs stay unemployed longer and appear to have a more difficult time re-entering the workforce than their younger counterparts, core-aged workers aged 25 to 54.Footnote 14  They are also at greater risk of early retirement than other older workers. Indeed, about 20% of older adults (50-75) who retired or had previously retired in 2008 stated their first retirement was due to displacement.Footnote 15 

Also, when unemployed older Canadians do find another job, they are more likely to suffer significant wage losses. About half of older Canadians aged 50-75 years old who returned to work after displacement reported significantly less income (e.g. at least 25 percent less) than their previous job.Footnote 16  This wage loss creates a disincentive to work, prompting some to stay unemployed longer as they hold-out for work at their desired wage, while others may opt for early retirement.

Older Workers with Disabilities, Chronic, Prolonged or Episodic Illness, Mental Health Issues, or Injuries

Another group of older adults who may face more challenging labour market circumstances are older Canadians who have a disability; chronic, prolonged or episodic illness; or who have sustained an injury.

Over 40 percent of Canadians over the age of 65 self-report having a disability.Footnote 17  As people age, there is an increased risk for late onset of a number of chronic diseases and/or injuries. The chronic diseases most noted as impacting functional capacity include cancer, diabetes, musculoskeletal diseases and chronic obstructive pulmonary disease.

Individual health has a significant effect on early retirement and workforce participation.
After retirement, illness/disability was the most reported reason provided by older adults aged 55-64 (17.2 percent) and seniors over the age of 65 (9.3 percent) for leaving a job in the previous year in 2011.Footnote 18  Among older adults between 55-64 years old not in the workforce, but who wanted to work, 30 percent stated they did not look for work due to illness in 2011.Footnote 19 

It has also been found that for men, each additional chronic condition increases risk of early workforce exit by 25 percent.Footnote 20 

Older adults in physically demanding work (e.g., involving crouching, bending, twisting, being in fixed position) are vulnerable to early exit as their work has placed them under physical strain leading to repetitive injuries and chronic conditions.Footnote 21  Also, while research shows that there are fewer injuries among older workers, they tend to be more severe and take longer to heal once they occur.Footnote 22  Back injuries are a common chronic injury among long-tenured workers, and back pain is particularly likely to increase the risk of early retirement. Footnote 23 

Adults with mental health issues and chronic physical disabilities experience a number of barriers to participating in the labour force including workplace discrimination, inflexibility, and stigma.

A recent report from the Panel on Labour Market Opportunities for Persons with Disabilities noted that a number of myths exist with respect to hiring people with disabilities. One commonly held myth is that the cost of accommodating a person with a disability is financially prohibitive when in reality workplace accommodations tend to be low cost. Footnote 24  Myths such as this can create unnecessary barriers for employees. Data from the 2006 Participation Activity Limitation Survey (PALS) indicates that 38.7 percent of Canadian workers with disabilities who were employed at the time of the survey reported having often experienced discrimination in the workplace, and of those, 3 percent reported that they had been denied accommodation. Furthermore, Canadian studies of persons with disabilities who have had multiple entries and exits from the workforce have reported discrimination based on perceived incapacity when none existed.Footnote 25 

According to a survey conducted by the Conference Board of Canada in 2011, mental health issues are prevalent in the workplace with twelve percent of survey respondents reporting they were “currently experiencing” a mental health issue and 32 percent noting that they had experienced a mental health issue at some point in the past.Footnote 26  The same survey found that almost three in ten employees say that people in their organization who have experienced mental health issues are treated differently by colleagues, their supervisor, and senior management.Footnote 27  Furthermore, employers consulted in 2012 by the Panel on Labour Market Opportunities for Persons with Disabilities indicated that mental health disabilities were particularly challenging for employers and that colleagues “…may be less understanding of mental health issues than other more visible disabilities”.Footnote 28 

Aging may not be correlated with mental illness, but older adults experience unique physical and social changes related to aging that may challenge their mental health and in turn their participation in the workforce. For example, older women with high job strain (e.g. high mental demands of job and limited job control) were more likely than those with low job strain to exit the workforce.Footnote 29 

The impact of an illness or disability on workforce participation and employment may begin long before workers reach the age of 55. Barriers to participation faced by older adults who have experienced a lifelong disability, chronic disease or mental illness may include low educational attainment, limited work experience and gaps in work history, social stigma and discrimination. As such, older adults with a history of health issues could face significant challenges that may make them vulnerable to discrimination, unemployment, and early workforce exit.

However, the barriers to employment faced by this group may be lessening as demonstrated by the fact that the share of older Canadians with disabilities who were employed increased between 1999 and 2010.Footnote 30 

Low-skilled and Low-literacy Older Workers

Low educational attainment also hinders success in the labour market. Participation and employment increase with educational attainment, while unemployment decreases.

Older adults and seniors with higher levels of education, particularly university degrees, have higher rates of labour force participation and employment than their counterparts with a high school or less than high school education. For example, in 2011, older adults aged 55-64 with a university degree had an employment rate of 67.3 percent versus 42.9 percent of those with less than high school. Seniors with a university degree had an employment rate of 20.5 percent in comparison to 6.1 percent of seniors with less than high school.Footnote 31 

The 2008 recession also showed how older workers and seniors with low levels of educational attainment are more vulnerable to shifts in the business cycle. For example, older adults with less than a high school education experienced a greater increase in unemployment in comparison to older adults with a university degree.Footnote 32 

Furthermore, while keeping all employees up-to-date with the ever-changing technologies is considered to be a challenge, these factors may prove to be an added barrier for low-skilled and low-literacy older workers. For example, older workers with low literacy, low levels of education, or limited technical or computer skills may be at a disadvantage in their quest to transition from labour-intensive to desk-type work.

Older Workers with Unpaid Caregiving Responsibilities

In Canada, informal caregiving refers to the ongoing informal care, support and assistance provided by family members and friends, without pay, to individuals needing care and support due to age, chronic disease or disability. Informal caregivers represent a significant share of the older employed population, with over a third of employed women and a quarter of employed men aged 45 and older providing care to a family member or friend.Footnote 33  As the population ages, the number of older adults requiring care will continue to rise, which will place increasing pressure on unpaid family caregivers. Canada will likely face an almost doubling of seniors needing care (2.4M) by 2031.Footnote 34 

Overall, informal caregiving responsibilities do not appear to be significantly affecting Canadians’ employment status. Evidence suggests that caregivers aged 45 years and older are almost as likely to be employed as non-caregivers. Only a small share of caregivers aged 45 plus retired early (4 percent of women; 1 percent of men) or quit/lost their last job (2 percent of unemployed women caregivers; 0.5 percent of unemployed men caregivers) as a result of caregiving responsibilities.Footnote 35 

That being said, research shows that working caregivers in Canada report higher stress, more interruptions at work, lower productivity and increased absences, and lateness as a result of their caregiving responsibilities.Footnote 36  These factors in turn can have long-term impacts on caregivers’ financial well-being, career progress, and pensionable earnings.Footnote 37 

It should also be noted that labour market outcomes for caregivers vary based on the number of hours of care provided per week. Most are able to manage both their careers and caregiving responsibilities because they provide low-intensity care to relatives and friends for less than 10 hours per week. Indeed, providing less than 15 hours of care per week does not appear to have a significant impact on labour force participation.Footnote 38  On the other hand, individuals who provide high-intensity care (more than 15 hours per week) are much more likely to be out of the workforce.Footnote 39  Men who provided 15 hours of care or more per week were 8.5 percent less likely to be in the labour force and women were 11 percent less likely.

Recent Older Immigrants

Overall, older immigrants aged 55 and older have done relatively well compared to their Canadian born counterparts. For example their employment rate was only two percentage points below that of their Canadian born counterparts.Footnote 40 

However, not all older immigrants fared as well as the average, as labour market performance appears to depend on the number of years a person has lived in Canada.

Immigrants who landed 10 or more years ago fare better than more recent immigrants.

Unemployment rates of older immigrants landed less than 5 years and 5-10 years were almost double that of those that landed 10 or more years ago and older Canadian born persons. Data also suggests that recent older immigrants landed less than 10 years may be particularly vulnerable to economic downturns, as they were severely impacted by the 2008 recession.Footnote 41 

Furthermore, recent older immigrants not only face the challenges to employment that other newcomers to Canada face with respect to credentialing, language barriers and cultural integration, but they also may need to overcome the barriers of ageism.

However, it is important to keep in perspective that recent older immigrants represent about 6 percent of the population of all landed immigrants aged 55 and older, and only 2 percent of all landed immigrants aged 15 and older.Footnote 42 

Older Aboriginal Seniors

Aboriginal CanadiansFootnote 43  have, on average, higher unemployment rates and lower individual incomes. As a result, more than twice as many Aboriginal Canadians live in poverty as compared to non-Aboriginal Canadians.Footnote 44  However, overall, older Aboriginal persons living off‑reserve had an employment rate that was similar to that of non-Aboriginal persons of about 34 percent.Footnote 45 

Older Aboriginal workers living off-reserve also fared relatively well since the recession of 2008 as their employment rate decreased only slightly (0.5 percentage points) from 34.8 percent in December 2008 to 34.3 percent in December 2011, while the employment rate for all Aboriginal workers aged 15 and older living off-reserve declined by almost three percentage points in the same period.Footnote 46  As such, older Aboriginal workers appeared to fare better than their younger counterparts.

Outcomes also vary according to identity group, gender and geographic location: Inuit face unique challenges living in remote areas of northern Canada; Aboriginal women have higher unemployment rates and lower incomes than their male counterparts; and outcomes for First Nations on reserve are typically lower than for those who do not live on a reserve. Indeed, Aboriginal persons aged 55 and over on-reserve had a higher unemployment rate (15.6 percent) than that older Aboriginal persons living off-reserve (9.6 percent).Footnote 47 

Employers Perspective on At-Risk Populations of Older Workers

Although, the NSC began its consultations with specific categories of at-risk older workers in mind, Council members found that employers did not share the same vision of what it means to be at-risk, defining it instead to meet their business needs.

Employers who were consulted via in-person meetings or telephone consultations typically responded that the individuals working for them were not at-risk, the company was. Their definition of “at-risk” was based on their corporate needs, such as replacing the specific knowledge and skills that would be missing if older workers or workers in general were to leave.

The employers who participated online were given a list of options of at-risk employees that matched the definition used for the purposes of this consultation. However, only a few of the online responses from employers mentioned at-riskFootnote 48  older workers as defined in the NSC priority.

This being said, the Council’s consultations with employers helped to raise awareness of at-risk older workers and to start a dialogue on this issue. As conversations evolved, employees identified key challenges they were facing or anticipated facing and the supports they needed to move forward in creating policies and practices that are more inclusive and cater to the needs of at-risk older workers.