Looming retirement surge takes on new urgency

By Laura Cassiani
|Canadian HR Reporter|Last Updated: 09/05/2003

Growing concerns over Canada’s looming retirement surge are back on the radar, according to a new report.

While the issue of an aging workforce is not new, the expectant retirement of hundreds of thousands of baby boomers has resurfaced as a priority issue for both labour and management, according to the Canadian Labour and Business Centre’s (CLBC) report Where Did All the Workers Go? The Challenges of the Aging Workforce. Just two years ago, in a similar survey, the issue received very little attention.

“(Labour and management’s) view of the seriousness of the problem has changed. There’s a growing recognition of the problem on both sides,” said Shirley Seward, CEO of the CLBC.

For the moment at least, employers and labour leaders are putting the issue on the front burner.

All of the 800 survey respondents from labour and management in both the public and private sector said they anticipate facing “very significant problems” in trying to replace retirees, the majority of which will retire between 2014 and 2026. A majority of management leaders said they would be able to replace more than 50 per cent of retirees in the next five years, while labour leaders anticipate management would replace fewer than half. And hiring younger workers will also become a priority across the board.

But fewer younger Canadians to replace retirees and a national skills shortage aggravates the problem. The situation is worse in the public sector, where years of downsizing and restructuring under the guise of deficit control left the sector with an older workforce who will be heading for retirement in the next 10 years.

“When you’re in that mode (of downsizing) you aren’t focusing on the long-term. You’re concerned about surviving, so fewer younger people were being hired to replace the retirees,” said Seward, adding that the CLBC is currently working on a report, expected to be released late this year, that will highlight some of the best practices in dealing with a retirement surge.

Focus on recruitment

In the meantime, both sides have shifted their focus from training and development to recruitment. Training was the principal strategy management and labour were undertaking to address the aging workforce two years ago. Today, recruitment was identified as a specific action taken to address the problem.

While training was cited as a more important activity in the private sector, labour and management particularly in the public sector are primarily using recruiting strategies to replace retirees, according to the survey.

“Training remains important but it isn’t enough. It’s quite a dramatic development. Management and labour are saying it is no longer enough to just train the current workforce, that they need people,” said Seward.

But training will always be a critical issue, especially as the workplace demographics begin to shift. Younger workers will be looking for an employer who can provide life-long learning and career development.

“It’s a really essential ingredient. It’s not new but it is still a pressing concern.”

Greater emphasis will also need to be put on:

•youth hiring and easing the transition from school to work through training;

•tapping into largely underdeveloped labour groups such as Aboriginal peoples; and

•government will have to re-think assessment of credentials from people coming into Canada.

“There’s a broad range of solutions and it is not the responsibility of one actor alone. No one is off the hook,” said Seward.

Flexible retirement policies

Developing more flexible pension and retirement policies is another solution. Both labour and management respondents from the public sector and labour from the private sector said requests for pre-retirement counseling, training and phased retirement have increased over the last two years.

Eliminating mandatory retirement ages across the country (Quebec and Manitoba are the only two provinces to have effectively eliminated the 65-year rule) won’t necessarily solve the labour shortage problem either, said Sheryl Smolkin, with Watson Wyatt’s Canadian Research and Information Centre.

That’s because while the mandatory retirement age is 65, most Canadians retire at the average age of 62.

“There’s not a cause and effect. But (eliminating the mandatory retirement age) does open the door for developing programs that will encourage people to stay longer,” she said.

But, said Smolkin, having legislated a retirement age while employers are trying to keep skilled workers is self-defeating, especially for workers who would like to continue working.

“We are sending out the wrong message with having a mandatory retirement age. It’s a contradictory message.”

Phased retirement plans are another option for those who would like to continue working when they hit retirement age, said Smolkin. These plans include modifying job duties for older workers, allowing extended leaves of absences and shorter working periods. Employers that implemented phased retirement programs in the mid-1990s used it as a way to lock people into early retirement. But today, more are using it as a retention tool. (Quebec has legislated a form of phased retirement but few employers are offering it to employees.)

“It’s definitely a good plan to try to keep older people in the workforce longer,” she said.

Changing demographics

Replacing aging workers will have a serious impact on HR strategies and the workplace in general. Competition will be high and employers will have to play the game in order to attract younger workers.

For one, there will be a greater focus on skills development in the workplace and a greater attention on work-life balance.

“Young people are looking for more than just a salary, they are looking for a lifestyle. What we will start seeing more of is a focus on healthy workplace as more than a social health issue but a bottom line issue.”

And where once employers favoured younger workers over older workers, and even encouraged early retirement, older workers will become more valued for their years of experience and acquired skills.

“(Older workers) are valuable because of their long, institutional memories and skills they’ve developed. You can’t just turn those skills on like a tap.”

With a slowdown in the economy, Seward said there is a temptation to revert back to the short-sighted lean-mean economic practices of downsizing.

“My fear is that we may again loose sight of the long-term picture. Let’s not get spooked about concerns about the economy. Let’s keep our eyes on the future.”

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