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Older Worker Adjustment Programs Lessons Learned Lessons Learned Final Report
Evaluation and Data Development December 1999 SP-AH093-12-99E
This study summarizes lessons learned from the involvement that Canadian governments have had in the area of older worker adjustment programs. This report is based on two technical reports prepared for, and under, the direction of the Evaluation and Data Development Branch of Human Resources Development Canada (HRDC). The first report was written by Marc Bennett, while the second was written by Michael Prince from Social Research and Demonstration Corporation (SRDC).
Canadian governments are trying to achieve the most productive and cost-effective results from human resource programs and policies. Professionally-conducted evaluations can help them reach that goal. They document our experiences with policies and programs that have had similar goals. They add to the “corporate memory” that helps us make still better decisions in the future.
This report summarizes the findings from a study conducted to identify the lessons learned from past experiences with programs for assisting displaced older workers; those people aged 45 to 64 who have lost a job for any number of reasons. In looking at displaced older workers, it was decided that the report should also attempt to shed light on what is the current status of older workers and what will be their role in any future economy. As such, it is hoped that future policy and programming designed to meet the needs of displaced older workers, may be developed in a more informed environment taking into consideration the role of older workers in years to come.
These barriers that older workers face arise from different sources — attitudinal, economic, financial, personal and social — and thus require a multi-faceted policy response. Like any other demographic or socially defined category of people, older workers are not all alike.1 In relation to the labour market, older workers vary in their occupations, sectoral locations, work histories, economic status, reasons for leaving work and for returning to work, as well as retirement income plans and prospects. Older workers’ experience with adjustment measures are affected by their levels of income, their level of formal education, and by their age. For example, “younger” older workers, those in the 45 to 54 age group, have a much higher rate of labour force participation than those in the 55 to 64 age group, and appear to use employment support services and other adjustment measures more readily. In general, older workers in the 55 to 64 group have been more seriously affected by economic downturns, closures and layoffs, as well as by age discrimination. As a result of these kinds of barriers, contemporary labour market experiences of older workers in Canada and elsewhere include several troubling trends. As a group, while older workers are less likely to experience job loss than younger workers, when they do lose their jobs, older workers tend to remain unemployed for longer periods. They experience larger average wage losses upon re-employment than other age groups. They may well exhaust their employment insurance benefits and have to resort to social assistance, the public welfare program of last resort. The proportion of involuntary job loss by older workers has increased over the last ten years. Displaced older workers are less likely to have a private pension from their employer or investment income than other people leaving the labour force. These same workers are over-represented among discouraged unemployed workers — those who have abandoned their job search, and are then not counted as part of the formal labour force and unemployment statistics. When they find work, unemployed older workers are more likely to obtain temporary employment compared to younger workers. In comparison to older workers as a group, displaced older workers tend to have been in low paying jobs, meaning they have smaller retirement pensions than older workers who have left the workforce for other reasons, resulting in greater reliance on government old age benefits. Many, in fact, receive little if any severance payments. Beyond a drop in income and living standard, the costs can include personal despair, family stresses, and feelings of rejection and anger. Canadian statistics indicate that among older displaced workers, the financial repercussions are progressively worse, the older the workers are when they are laid off. Exhibit #2 looks at a seven-year period after the lay-off (excluding the first post-lay-off year), where the average annual earnings from employment after lay-off was $11-12K among those laid off in the 45-49 year old age group, $8-9K among those in the 50-54 year old group, $3-4K for the 55-59 year old group, and $.5-2K for those 60-64 years old. These lower earnings are compounded by the fact that, among laid-off older workers as a group, the oldest workers generally had the highest employment incomes prior to being laid off, so the drops in income tended to be much greater (and presumably much more devastating financially and otherwise).2
In order to better understand the broad lessons learned, it is important to keep in mind the two groups to whom the lessons apply. The first group would be those older workers who find themselves “out of work”; the displaced older worker. While the second group generally could be classified as older workers, more specifically, it refers to the older worker of the future. The reason this distinction is so important is that any policy or program designed with the first group in mind, may not be the best response for the second group. Without a long-term perspective, viable short-term solutions may only serve to limit future policy options. With these two groups in mind, let us now turn to what broad lessons we have learned from the literature.
A large number of gerontological/psychological studies present direct measures of job performance and analyze their relationship to age. A recent survey of this literature concludes that there is no significant overall difference between the job performance of older and younger workers (Warr, 1994). In almost every case, variations within an age group far exceed the average differences between age groups. One of the causes of large productivity differences within age groups, namely poor health, is significantly related to age. The risk of poor health and disability rises with age, and the onset of health problems affects the timing of retirement for a significant number of older workers (Bound et al, 1997; Burkhauser et al, 1997). However, recent increases in longevity appear to have been accompanied by a significant reduction in the incidence of disability at older ages (Manton et al, 1997), which suggests that the extent to which poor health reduces the productivity of workers at any given age is declining. Even if aging typically does not reduce a worker’s ability to perform familiar job tasks, a declining ability to adapt to changing skill requirements would tend to lower their productivity over time. “Trainability”, like productivity generally, defies easy measurement. Nevertheless, some indirect evidence is available thanks to the International Adult Literacy Survey (IALS). The IALS is an important source of evidence about the relationship between age, productivity, and trainability (see OECD and Statistics Canada 1995 for more information). IALS literacy scores are substantially lower for older individuals, but these cross-sectional comparisons confound true aging effects with other determinants of literacy, notably, the lower educational attainment of older cohorts. When the survey controls for demographic and economic variables, the results suggest that literacy skills generally decline only modestly between ages 40 and 65. Evidence from the IALS also indicates that literacy skills improve with practice and deteriorate if not used, the “use it or lose it” phenomenon (OECD and Statistics Canada, 1995). As such, workers (regardless of their age) in a “learning environment” appear much less susceptible to a decline in trainability. In looking at the situation of older displaced workers, the ILO recently argued that policies are needed to allow for training throughout one’s working life in order to avoid the obsolescence of skills. While it may be too late to correct for the low educational attainment of many displaced older workers today, for the older worker of tomorrow, training today is even more important in light of the greater responsibility that will be placed on older workers in the labour market. Yet this emphasis on training is not only necessary for older workers, but for all workers. As the knowledge explosion results in information obsolescence, those who are excluded from this new information may face social obsolescence as well, in the sense that they feel removed from the “issues” of the day. This does not only apply to low-educated older workers, but every other age group that also has a weak educational foundation. Hence, the United Nations Educational, Scientific, and Cultural Organization’s (UNESCO) call for a concept of lifelong learning will have a direct bearing on overall worker productivity; as workers are less likely to face redundancy in later life if they have benefitted from access to lifelong learning opportunities (ILO, 1998).
When it comes to the trend towards earlier retirement, one must consider the effect that such a trend has on employers’ perceptions vis-à-vis older workers. If we look at the example of the Netherlands, which has a low percentage of older workers, we can see a very sharp reduction in training rates that corresponds to age. Whereas 15% of workers aged 25 to 44 years participated in professional and career upgrading training, the corresponding rates were 12% for those aged 45 to 54 years, and a meagre 2% for those aged 55 to 64 years (OECD, 1998). Mistaken expectations about the timing of retirement could have negative impacts both at the level of individual firms as well as the larger economy. However, governments should be able to facilitate the labour market adjustment to workforce aging in coming years by providing timely information to workers and employers that helps them anticipate the implications of demographic trends and policy changes related to the timing of retirement. Since the return on investments in skills-upgrading depend on the anticipated age of retirement, any changes affecting this age need to be made as far in advance as possible (OECD, 1998). It may prove prudent for governments to demonstrate how older workers will play an increasingly important part in the overall labour force. According to projections made by the OECD, the rate of labour force growth in the early 21st century will be considerably lower than in the recent past in many member countries (OECD, 1998). Such a significant reduction in labour force growth must be considered in light of the above-mentioned trend to earlier retirement. One way to offset the projected fall in labour force growth would be to enact pension policy changes designed to raise the effective retirement age. Such a decision would, in turn, magnify the aging of the labour force, by allowing a larger percentage of workers to remain working longer, thereby raising older workers’ overall share of the working population. Yet such a “graying” of the workforce need not be worrisome. Following their own projections, the OECD predicts that the cohort of workers aged 45-64 in 2015 will be better educated than their counterparts today (OECD, 1998). As such, this rise in educational attainment should ease the absorption of larger groups of older workers. Hand-in-hand with this increased aging of the labour force will be the need for greater training initiatives for older workers. In the coming decades, as older workers play a larger part in the labour force, they will also need to play an increasingly important part in helping countries meet new skill demands. As the percentage of younger workers falls, it is likely that older workers will have to provide the measure of adaptability required. Yet this should not prove to be problematic since the limited evidence currently available suggests that older workers, with adequate educational attainment and a history of participation in on-the-job training, appear to be good training prospects (OECD, 1998).
The shift from work to retirement can be a sudden and disconcerting experience. One international study noted that, “in the vast majority of cases, the transition from work to retirement is a relatively abrupt one, especially for men. There are few opportunities to move to lighter work or to part-time work as an intermediate phase. Those who are self-employed have more chances to adjust their work patterns to enable a gradual withdrawal from employment” (OECD, 1995:120). Moreover, the relation between retirement and unemployment is ambiguous for some older individuals. Given the extent of government downsizing and corporate restructuring measures in recent times, the distinction between early retirement and early labour force exit is less than clear-cut (LeBlanc and McMullin, 1997). The end result is that there are older workers who find themselves “retired” who would still rather be working. For these individuals, despite having qualified for a retirement package, they are left feeling “unemployed”. A recent report on the potential benefits of, and the likely opportunities for, phased-in retirement among Canadians notes that the present design of most occupational pension plans, as well as the Canada Pension Plan (CPP),3are not conducive to a phased-in approach to retirement. Regulations governing workplace pensions in both the public and private sectors are barriers to a more graduated approach to earning partial pension credits as well as drawing partial pension benefits. In addition, the proportion of Canadians who could afford to go into semi-retirement rather than remain working full time, is deemed to be small given the lack of pension coverage in much of the private sector and the limited use of retirement savings plans (HRDC, 1996).
One of the key empirical findings from the literature is the importance of pensions for the timing of retirement (Gruber and Wise, 1997; OECD, 1998). Public and private pensions often create strong incentives for workers to retire at the first age of benefit entitlement, because of high effective tax rates on earnings. In some OECD countries, unemployment and disability benefit systems, or special early retirement programs, also create strong incentives for workers to withdraw from the labour force in advance of conventional retirement age. For example, in both the Netherlands and Germany, eligibility for disability insurance is very liberal. The eligibility requirement is liberal enough that it often only requires that the individual be unable to perform the duties of available jobs. As part of the 1999 International Year of Older Persons, the UN has released an International Plan of Action on Aging. In that report, the UN warns that lowering retirement age levels in order to open up employment opportunities for the young can hardly be seen as anything but a short-term and partial solution of one social problem through the creation of another, probably longer-lasting one. In other words, offering early retirement may help alleviate some of the youth unemployment today. However, as the lifespan of pensioners increases, who will be the workers who will support them? The 1995 World Labour Report of the International Labour Organization (ILO) goes even further than the UN, in saying that many recent policy changes on early retirement, will prove to be costly mistakes. The ILO bases their conclusion on the “dependency ratio”: the number of active working people available to support each non-working older person. In Western Europe, this number is expected to fall to 1.5 workers for each retired person by 2025. In Canada, the 1998 ratio was 5.4 working-age persons for every person over 65 years of age. However, in 2020, this number is projected to fall to 3.8; with a further decline to 2.9 by the year 2030 (see Exhibit 3).4 While part of the increase in old-age dependency can be attributed to the natural aging of the population and hence, is beyond government involvement, in recent years, more and more of old-age dependency can be attributed to a marked decrease in the participation rates of older workers at an ever-increasing younger age. In the Netherlands for example, between 1960 and 1990, the participation rate for men aged 0-64 fell from 81% to 23%. This proves to be doubly expensive in that not only do older workers cease making an economic contribution, but they also start drawing early retirement benefits. The OECD has also questioned the sustainability of continuing the simultaneous trends of greater longevity and progressively earlier retirement. Such a continuation would imply that the dependency ratio of retirees to active workers rises without limits. It would therefore, make it very difficult to address the pension “affordability problem” and could, in fact, lower living standards generally. In industrialized countries between 1960 and 1984, pension expenditure as a proportion of GDP more than doubled. An example of what this could mean if current trends continue, by the year 2025 in Germany, there may be more pensioners than employed people (ILO, 1995).  5 The natural conclusion to draw in order to correct these disturbing trends would be to raise the age of retirement. However, as the National Advisory Council on Aging (NACA)6 pointed out, such a move would hurt many low-income workers who take up their CPP retirement benefits when they are laid-off or quit work due to poor health. Thus, any time that pension eligibility becomes an issue, the fact that older workers are not a homogeneous group needs to be taken into consideration. In order to respect this diversity, a more flexible approach to pension eligibility may be a practical solution.
The literature and research inform us that most older workers want to work and, if they become unemployed, want to obtain a new job (Aitkens, 1995; Marshall, 1995). Based on focus group discussions with older workers across Canada, and meetings with a number of employer and labour organizations, the Advisory Council to the federal employment minister found that, “For the majority, only full-time employment would satisfy their economic, social and psychological needs. Others view part-time employment as a means of supplementing their pension or investment income and a few seek opportunities to remain active through volunteer work and other community activities” (CEIAC, 1985:11). Some other evaluation studies, in probing the motives of clients in participating in employment development programs, similarly found that most older clients expressed a “need” to be working. However, as was mentioned earlier on, despite a willingness to work, displaced older workers are often confronted with systemic barriers that impede their ability to secure new employment.
Having looked at the broad lessons learned related to older workers in general, in this section, we look at specific lessons learned regarding one segment of this population; the displaced older worker. The literature shows that there are a variety of programs in existence that have a potential to influence the re-employment and overall income circumstances of laid-off older workers. For the sake of this report, these programs were considered for their impacts along the following dimensions:
While the overall aim of this section was to focus on programs that target assistance to displaced older workers, on occasion it was also necessary to look at programs that consider older workers as only one of several client groups, as well as those programs that do not differentiate at all among specific segments of the population. This organization provides a useful framework for reviewing the effectiveness of different approaches, yet it is important to keep in mind that programs are often a mix of these different approaches, and that government labour market adjustment policies and programs are typically a dynamic blend reflecting multiple and often changing sets of objectives. I Active Employment and Adjustment Services Active employment and adjustment services refer to those initiatives designed to prolong the labour market participation of older workers until normal retirement age is reached. These programs, such as job-search assistance, counselling, job placement services, and training, seek to reintegrate displaced older workers into the labour market using measures that require active client involvement. The lessons learned with respect to active employment and adjustment services are presented on the following pages.
Research in all the countries examined in this review shows that while active employment and adjustment services (as opposed to more passive income support services) can assist in re-employment of older workers, programs designed for workers in general that focus on traditional training and counselling approaches neither attract nor benefit significant numbers of older workers. Even where programming is active in nature, and geared toward re-integration rather than compensation, a high proportion of the programs reviewed here have had unsatisfactory results in terms of re-integrating displaced older workers into the workforce (CEIAC, 1986; Tindale, 1991; Trebilcock, 1986). The findings vary according to the program being evaluated, but the following reasons appear most frequently:
Human Resource Centres of Canada (HRCCs), formerly Canada Employment Centres (CECs), offer employment counselling, placement and information services to the general population of clients seeking these services.7 In the past, the literature was critical of the CECs, especially for older workers, reporting that many job seekers received no job referrals and few received a job with CEC assistance (Saunders, 1984). One study of CECs looked specifically at their effectiveness in providing services to older workers (Dunn, 1985). The study found that only 28% of CEC-registered older workers indicated that the training programs or courses available suited their needs, and many of these people had to wait six months or more for the training to begin. The study concluded that the quality and responsiveness of front-end CEC services were inadequate and often lacked sensitivity to the needs of unemployed older workers. Many CECs did not possess the financial and human resources necessary to provide adequate services to individuals aged 45 and over.8 The situation with the CECs was such that a special advisory council to what was then the Minister of Employment, found that most older workers had learned to expect little or no help from their Canada Employment Centres (CECs) in their job search and thus, had turned to other job placement and counselling services, where they existed, or embarked on their own job searches (CEIAC, 1985: 17). The Council concluded that community-based and community-operated employment agencies had been more effective for older workers than the CECs (CEIAC, 1986: 12). The Canada Manpower Industrial Training Program (CMITP) was an on-the-job training initiative designed to alleviate job shortages of skilled labour, and provide assistance to workers at risk of becoming unemployed as a result of technological advancements or skill obsolescence. A 12-month follow-up survey of individuals who had either completed or withdrew from CMITP-sponsored training found that all age groups benefited in terms of increases in their employability, but older workers showed the smallest gains. Finally, the National Training Program operated through CECs experienced low participation from older workers. Reports indicated that older workers appeared to lack the incentive to undertake training, particularly training in new skills. Those with interest in training preferred upgrading or building on their existing skills (CEIAC, 1985: 17-18). As well, entrance requirements to training programs were viewed as being too high, especially formal educational levels for some older individuals, and training allowances were seen as being too low. CECs were reported as not encouraging unemployed older workers to consider training as an option. Employer attitudes and concerns of not recovering their training dollar investment from older workers were also viewed as barriers to successful participation.
The review has identified a number of specific features of labour market adjustment programs that are reported to contribute in a positive way to the re-employment of displaced older workers.9 While it may not be possible to integrate all these features into every type of program, they do provide a strong set of guidelines when designing programs with older workers in mind.
While it is unfortunate that the international literature reveals very few programs specifically designed to help older workers adjust to economic and structural change in the countries examined for this study, some targeted approaches have had success in North America, where they involved job placement and/or training and counselling tailored to the specific needs of individual clients. The success of these approaches has been attributed to the high degree of support and guidance provided to participants, as well as their focus on building self-esteem and motivation among older individuals. Because these programs are specific to older individuals, service providers can tailor activities to reflect their needs and interests. As a result, participants in segregated workshops appear to develop a greater sense of confidence that allows them to undertake more pro-active job search activities. In Canada, the Employability Improvement Program (EIP) was established in 1991 as one of four programs under the Employment Programs and Services replacing the CJS, to provide employment development services for individual workers who faced labour market difficulties but were motivated to work. Older workers were included as one target group. A 1995 evaluation (HRDC, 1995) measured the labour market outcomes of target groups in the three main components of EIP — Job Opportunities (JO), Project-based Training (PT) and Purchase of Training (POT). The evaluation found that older workers, along with all other target groups, had significant gains in weeks working and in annual earnings under all three options. They realized their greatest gains in absolute terms from POT. In general, older participants achieved greater absolute gains than youth, less educated and women, and smaller gains than the visible minorities, persons with disabilities, and social assistance recipients target groups. The evaluation revealed that the gains for EIP clients were greater than for participants in similar programs in the former Canadian Jobs Strategy (CJS). Three reasons were cited by HRDC management. One was that EIP clientele tended to be older and better educated, and had more work experience. The CJS was funded from general revenues and concentrated on the long-term unemployed and groups wishing to enter the labour force. EIP was funded, in substantial measure, with EI funds and so more claimants were people who had been recently employed. A second reason was that EIP was a more client-centred approach in terms of the selection of clients and the matching of their labour market needs with interventions based on local circumstances, and delivered through partnership arrangements. Third, EIP had built on lessons and experience from CJS such as the results-based practices with the national client follow-up surveys. Yet another example of a Canadian program was Outreach. Outreach was an experimental program established in 1973 to provide counselling and job placement services to older workers, among other target populations. A 1990 evaluation concluded that the program was for the most part ineffective, with low participation and success rates for older workers in training and counselling (HRDC, 1990b). However, the employer contact services were seen as having been an effective service for older workers. Similarly, Job Finding Clubs for older workers were found to be effective in that they focused primarily on local peer support, mentoring and contacts with potential employers. Workers were expected to do their own job seeking. These approaches were found to place 70% of their clients, among which 80% were in full time positions.10 A key to success was that the peer support and mentoring attacked the problem of older worker discouragement. Finally, New Brunswick Job Corps, implemented in 1994 under the Federal Strategic Initiatives program, works with non-profit, private and public sector (municipal and provincial) host organizations to provide work placements to older workers aged 50 to 65. Participation is voluntary. To be eligible, older workers must be below a total family income of $20,000 a year, be a displaced worker, or be eligible to receive EI benefits or social assistance. The program provides 1,000 eligible individuals a work placement with a project host employer for a period of six months. Types of work include silviculture, nature trail development, upgrading of beaches and environmental projects. For the remaining six months, during which participants are not active with a host employer, they receive a prorated amount that reflects the total income provided during the active period. An interim evaluation done in 1996 of NB Job Corps (HRDC, 1996b) reported that benefits to both participants and employers have been very significant. The program has had a positive economic impact on the province and the outputs produced by participants are of substantial value. Econometric estimates indicate that the program has been responsible for higher total incomes than in the pre-program period and has reduced demands on income support programs. Moreover, the report points out that the increased entitlement to the CPP that the program generates will reduce future dependency on passive support programs. The work completed by participants has improved the general physical environment and projects were developed which could not have been completed otherwise. The program reached the specified target group. In 1994, for example, the average age of a participant was 56 years. Approximately 60% of the participants had been social assistance recipients. The evaluation also found that the program is operated at a reasonable level of administrative cost, appears to be flexible and adaptable, and produces results in a non-demeaning manner. The types of work placements offered tend to be in or near the participant’s own community, and appear to be consistent with the skill levels of participants and with the kinds of occupations and industries in which they had been employed in the past. U.S. programs that use the targeted approach to employment services have made significant contributions to the re-employment of older workers in some cases. Segregated workshops, which provide counselling and help develop personalized job-finding skills among the older segment of the population, help to reinforce the self-esteem and motivation among participants, and were found to play a major role in the 75% placement rates of older clients. The provision of job search assistance offered through these establishments, in combination with a placement component which provides individualized services to older participants, reportedly helped improve the confidence levels of older participants and enabled them to become more independent in their job search. The U.S. experience demonstrates that there appears to be a relationship between the amount of on-going job search support and guidance provided to the older workers, and the successful placement of these individuals into employment. The literature indicates that programs that incorporate a job developer function (which makes personal contact with local employers) displayed the highest placement rates. Conversely, those U.S. programs which were not considered to be an effective means of assisting older workers obtain employment, provided only limited support and guidance, particularly with respect to counselling, assessment and job development. There is also some evidence that suggests that on-the-job training that is individualized to suit older workers’ strengths, weaknesses, interests and needs typically results in permanent job placements. The literature indicates that many training programs that adapted their curriculum and delivery mechanisms to better reflect the needs and interests of older individuals were found to improve both their participation and placement into employment. Moreover, in the U.S., training which was more personalized, and which included on-going counselling and assessment activities, were typically effective means of encouraging the re-employment of older participants. As a point of comparison, it appears that targeted delivery approaches have not been as effective in countries abroad. These strategies, aside from attracting fairly low participation of eligible older clients relative to similar North American programs, do not appear to make significant contributions to reintegrating older individuals into the workforce. The Australian experience, for instance, which modified existing programs to better serve the needs of older workers, was found to have little or no impact on the re-employment of older participants. In Sweden, among participants of sheltered active labour market programs in 1990 and 1991, only 5% of clients over 55 years of age were successfully placed into employment or training. It is not clear what specific approaches were used, so it is difficult to assess the potential reasons for this lack of success. II Income Support Programs Income support programs represent more passive approaches to assisting older workers adjust to economic and structural change. They are designed to provide older workers with financial assistance either to bridge the gap between a job loss and re-employment, or to ensure that they are provided with sufficient income until they become eligible for retirement benefits.
Income support measures were found to be significantly effective for ensuring an adequate standard of living among unemployed older workers. The results from evaluations of income maintenance programs suggest that these approaches have enabled older recipients to enjoy a greater income than unemployed non-recipients, and have reduced the financial hardships associated with a job loss.
One of the primary labour market problems encountered by many industrialized countries in the 1990s is the increase in the proportion of older workers relative to the number of available employment opportunities. Policies that compensate unemployment and that provide disincentives for older workers to retrain and seek re-employment, whatever other drawbacks they may have, could represent a viable means for making room for younger, more skilled workers. A number of studies have shown that programs that induce the early withdrawal from the labour force of older workers have served to open up positions for younger individuals. On the other hand, a 1995 ILO report found that the early withdrawal of older workers does not necessarily benefit younger workers. Referring to early retirement schemes in countries such as Belgium, France, Spain, and the United Kingdom, the report concludes that the total impact of such measures on the problem of youth unemployment is negligible. The reason for this is that new entrants to the labour market often lack the experience and know-how necessary for the jobs vacated by the older workers. More often, the jobs just disappear (ILO, 1995). Regardless of the overall impact on the labour force, it should be pointed out that there is an indication that employers have benefited from these initiatives. The early retirement scheme in the Netherlands, for instance, was found to be a means for employers to reduce their payroll by re-staffing positions previously held by early retirees with fewer and/or lower paid younger employees. III Strategies for Easing the Transition from Work to Retirement Initiatives developed to help ease the transition of individuals from work to retirement include measures such as work-sharing, part-time employment, and phased retirement. They allow older individuals to maintain their labour force attachment and continued income from employment, and are intended to reduce the financial and emotional shocks often associated with full retirement.
Initiatives intended to ease the transition of older individuals from work to retirement have met with some success in terms of placing workers 45 and over into jobs, or keeping them in employment positions that are in jeopardy. The literature indicates that for many older workers, the need to remain productive members of society is an important aspect of later life. Moreover, the stigma attached to receiving government funded income support encourages many older individuals to opt for lower paying employment over financial assistance. In addition, particularly given the employment barriers faced by older workers, and the fact that many employers have reported a preference for hiring older workers into alternative work settings, transitional approaches may represent a practical solution to easing the transition from full-time employment to retirement. It is important to recognize, however, that alternative work environments and phased retirement appear to be more successful with the older segment of this age group (i.e., 55 years of age and older). There is also evidence that many older workers, including those aged 55 and over, are not interested in accepting the lower wages often associated with these alternative work settings. Measures such as part-time or temporary employment and work-sharing have met with varying degrees of success in each of the countries examined for this report. For instance, a Canadian temporary work initiative offered individuals between the ages of 50 and 65 a guaranteed annualized income in return for six months of work in community and environmental projects. It has been found to improve the overall incomes and quality of life of participants, while allowing them to remain productive members of the community (HRDC, 1996b). The U.S. experience with alternative work arrangements has resulted in significantly high placement rates of older individuals and has allowed them to enjoy prolonged labour market participation, while reducing their reliance on government income support. Internationally, in addition to providing income advantages to older workers and enabling them to remain active labour market participants, this approach has helped firms restructure their workforce in order to remain competitive, while continuing to benefit from the experience and reliability of the older employees. Perhaps the best example of this would be Sweden. The partial retirement scheme in Sweden provides workers with access to increased income under the program, while allowing them to remain active in the labour force, albeit at a reduced rate. In addition, participants have reported that they value their increased leisure time and many feel more rested and healthy than they did during full time employment. Moreover, this Swedish partial retirement initiative appears to allow firms to reorganize their human resources in order to achieve greater productivity, yet continue to benefit from the experience and resourcefulness of older workers. Employers have also reported that partial pensioners produce more than full time workers within the same age group. What is important to note in all of this is that the concept of “preparation for retirement” should not continue to be thought of as a last-minute adaptation, but be proposed as a lifelong consideration from adulthood onwards — as much to the individual for his or her future benefit, as to policy makers, universities, schools, industrial work centres, the media, and society at large. This would serve as a reminder that policies on aging are an important society-wide concern (UN, 1998).
An examination of the active labour market adjustment approaches implemented in various countries has revealed that there is seemingly no consistency in the labour market participation rates of older workers across the countries examined. In Japan and Sweden, for example, up to 90% of individuals aged 55 to 65 are active members of the labour force, compared to almost 50% in Canada, and as few as 40% in France and the Netherlands.
Aitkens, Andrew. 1995. “Modern Miracles.” in Caledon Institute of Social Policy, Critical Commentaries on the Social Security Review. Ottawa: Renouf. Pp. 5-10. |
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