Gateway Gazette

Older Workers: a Solution to the Labour Shortage?

Due to population aging, expansion of the labour pool has been flagging in recent years, and that growth will slow even more by 2020, according to demographic projections from Statistics Canada (Chart 1). Consequently, recruiting qualified personnel, which many businesses are already finding difficult, could become a serious challenge. Hiring older workers, or retaining those already on staff for longer, could mitigate this problem.

The labour force participation rate of older workers is following an upwards trend

The members of the baby-boomer generation were born between 1946 and 1965. The oldest among them turned 55 in 2001, fifteen years ago. Consequently, since then, the population aged 55 and over has increased at a fast pace: average annual growth in the numbers of that age group has risen from 2.2% between 1971 and 2001, to 3.2% between 2001 and 2016.

This population segment’s labour force participation rate has climbed during that period.1 Among those aged 55 to 64, the rate has risen from 51.3% in 2001 to 65.8% in 2016, and among those aged 65 and up, the rate has doubled, from 6.1% to 13.7% (Chart 2). During that time, the participation rate of the population aged 15 to 54, which comprises the bulk of the labour force, has remained relatively stable at around 80%. While we should not expect the participation rate of those aged 55 and over to match that level, it could increase quite a bit more. In many OECD countries, the participation rate of 55- to 64-year-olds has reached 70%, and the rate of those aged 65 and over exceeds 20%.

Many reasons to put off retiring

Deferral of retirement is a trend that started at the end of the 1990s. According to a study by Statistics Canada, between 1998 and 2009 voluntary retirement has been delayed by 2.4 years.2 There are many factors underlying this trend: life expectancy has increased, people are enjoying good health for longer, seniors are more educated and technological advances have made work less physically demanding. Financial constraints also play a role, in particular the fact that defined benefit pension plans are less common and interest rates are at floor level—making retirement income more uncertain—and let’s not forget that a certain percentage of older workers have not managed to save up enough for their retirement.

Advantages offered by older workers

By attracting and/or retaining older workers, businesses can mitigate the recruitment challenges associated with population aging. This is a considerable advantage, and it is not the only one. Older workers have experience, quickly become autonomous, generally require little supervision and work well in team settings. They usually tend to stay longer with their employer, which means less money needs to be spent on hiring and training new employees. Finally, they can provide a harmonious transfer of the business’s knowledge to younger employees.3

Incentives to encourage workers to stay in the labour market longer

According to a consultation exercise carried out by Human Resources and Skills Development Canada among workers over age 50, factors relating to personal and family health and the quality of the work experience are just as important as financial considerations when it comes to deciding whether to keep working.4 There are many strategies available to businesses for retaining older workers, or attracting new ones. The main components of those strategies are as follows:

Flexibility: Older workers seek working conditions that enable them to balance work with their personal lives. They would be prepared to keep working longer if they were offered more flexible working conditions (part-time work, compressed workweek, teleworking, job sharing, possibility of taking unpaid leave).

Training: Businesses need to help older workers acquire competencies that would enable them to adapt to evolving technologies and new practices in the workplace.

Better quality of work: The nature of the work (interesting, less stressful and less physically demanding) also has a bearing on workers’ decision to stay on the job.

Professional challenges: Whatever their age, workers need to take on professional challenges. New positions can be created, tailored to the changing needs, preferences and abilities of older workers, so as to increase their motivation. In addition, offering more experienced workers an opportunity to play a mentorship role towards their younger colleagues is a winning strategy. Not only does this provide a significant source of motivation to the mentor, but it promotes the transfer of skills and of the business’s heritage to future business leaders. At the same time, young employees fresh out of school can share the latest techniques, approaches and theories in their area of expertise, with their mentors.

Extended benefits program: Older workers are generally more interested in medical insurance and extended health benefits, compared with their younger colleagues. Offering such benefits could help attract older workers and keep them working longer.

Conclusion

Recruiting older workers and/or keeping long-standing employees in the business for longer are excellent ways of mitigating labour shortage problems resulting from population aging. This strategy also offers many other advantages to the businesses that adopt it, in terms of labour quality and costs. Many factors, such as more flexible working conditions to promote personal and work life balance, have a significant bearing on such efforts. If businesses wish to attract or retain older workers, they need to take this into account.

Finally, it should be mentioned that recruiting and retaining older workers is not a strategy that is sufficient in itself to solve the problem of anticipated scarcity of qualified labour. Businesses must keep in mind that one of the best ways to resolve that problem is to improve their productivity by investing in technologies, machinery and equipment, and in training their employees.


1. The participation rate of those aged 55 and over is equal to the labour force of that age group (consisting of those working and those who are unemployed) divided by its total population.
2. When certain events—such as a layoff, illness, disability or the necessity of taking care of a loved one—happen in later life, they are likely to push workers to leave the labour market for good and to take what one could call “involuntary” retirement. See the study by Yves Carrière and Diane Galarneau (2012) “How many years to retirement?”, Insights on Canadian Society, Statistics Canada, December 2012.
3. Human Resources and Skills Development Canada (2012), Age-friendly workplaces: Promoting older worker participation, page 2.
4. https://www.canada.ca/en/employment-social-development/services/consultations/older-workers-employers.html#h5

Source: Business Development Bank of Canada

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