Lack of comparable earnings drives older displaced workers to retire early

Wage insurance, job-search assistance could help
By Amanda Silliker
|Canadian HR Reporter|Last Updated: 03/28/2011

Older workers who face a sudden layoff rarely match their previous earnings upon re-employment and, as a result, many retire early, according to a study by the Institute for Research on Public Policy (IRPP) in Montreal.

One-quarter of workers laid off between the ages of 45 and 59 leave the workforce within five years, found Labour Force Participation of Older Displaced Workers in Canada: Should I Stay or Should I Go? Among those aged 60 to 64, the proportion rises to nearly 70 per cent. This is due largely in part to the inability to find a new job with a comparable salary, said David Gray, professor of economics at the University of Ottawa and co-author of the study.

“So, here we are, losing people, perhaps forever, from the labour force because it seems the only way they can get a job now is to take a tremendous wage cut,” said Gray. “A lot of them simply throw in the towel and try to finesse an early retirement.”