菲沙研究所-加拿大老年工人劳动力参与的障碍（英）-2022.4-37页_848kb

Summary of Barriers to the Labour Force Participation of Older Workers in Canada

Core Content

The paper "Barriers to the Labour Force Participation of Older Workers in Canada" by Morley Gunderson explores the challenges that older workers face in remaining employed or re-entering the workforce in Canada. It highlights the importance of addressing these barriers in light of demographic shifts, policy changes, and evolving workplace dynamics.

Main Points and Key Information

1. Demographic Trends and Policy Context

• The Canadian population is aging, with the proportion of seniors (age 65 and over) expected to increase from 14.1% in 2010 to 23.6% by 2040.
• The working-age population (15 to 64) is projected to fall from 69.3% to 61.5% by 2040, leading to a doubling of the senior dependency ratio.
• The aging workforce is a critical factor in the current and future labor market, especially with the "great resignations" during the pandemic creating labor shortages.

2. Barriers to Continued Employment

a. Age Discrimination

• Age stereotypes and discrimination are significant barriers to the continued labor force participation of older workers.
• Age discrimination is less scrutinized than other forms of discrimination, such as gender or race, and is often not treated as seriously in legal and normative frameworks.
• While mandatory retirement is now banned in Canada, some professions (e.g., law, consulting, public safety) still have exemptions at age 65.

b. Government Pensions and Clawbacks

• Programs like the Old Age Security (OAS), Guaranteed Income Supplement (GIS), and provincial supplements are income-tested and include clawbacks that reduce benefits if seniors earn additional income.
• These clawbacks act as an effective tax on employment, discouraging older workers from staying in the labor market.
• For example, the GIS clawback rate is 50%, and in some provinces, such as Saskatchewan, combined clawbacks can push marginal effective tax rates (METRs) over 100% for certain income levels.

c. Canada Pension Plan (CPP)

• The CPP is based on contributions rather than general taxation and allows for early (age 60) and delayed (age 70) retirement.
• The age of 65 for normal CPP receipt has not changed despite increased life expectancy, which contrasts with most other developed countries.
• Actuarial adjustments could be made more generous to encourage continued work, especially for those who delay retirement.
• The CPP's structure, including reduced payments for early retirement and increased payments for delayed retirement, can discourage older workers from staying in the workforce.

d. CPP Disability Component (CPP-D)

• The CPP-D provides benefits for non-work-related disabilities but has a cap of $6,100 in 2021 for earnings.
• This cap can discourage individuals from returning to work, as they risk losing benefits.
• The program also has lax administration, which may reduce the pressure to return to work.
• The incentive to work is further blunted for older workers due to the correlation between disability and age.

e. Taxation and Retirement Income

• The personal income tax credit for seniors has a clawback rate of 15% for income above approximately $39,000 in 2021.
• Combined with other clawbacks, these tax rules can create high effective tax rates, reducing the incentive to work.
• Workers' compensation provides only 80–90% of wage loss, offering little financial incentive to return to work.

f. Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs)

• RRSPs must be converted to RRIFs or annuities by age 71, which can push recipients into higher tax brackets.
• Contributions to these plans are no longer allowed after age 71, which can discourage continued employment.

3. Impact of Retirement Policies

• Many policies are designed for a previous era of work and may not align with the current labor market, which is more flexible and diverse.
• These policies often assume that older workers will not work, which is increasingly inaccurate.
• There is a need to re-evaluate existing policies to ensure they support the diverse needs of both employers and employees, including the desire for continued work or retraining.

4. Benefits of Continued Employment for Older Workers

• Older workers can continue working for financial security, mental and physical engagement, and to avoid the negative health and cognitive consequences of abrupt retirement.
• They can also provide valuable mentoring and institutional knowledge, which benefits employers and firms.

5. Conclusion and Recommendations

• The paper emphasizes the need to remove or reduce barriers that discourage older workers from staying in the labor force.
• These barriers include age discrimination, high clawback rates, and restrictive retirement policies.
• Reforms to the retirement income system are critical, as they are a major policy challenge with far-reaching implications.
• A comprehensive review of overlapping tax and clawback mechanisms is necessary to support the continued employment of older workers and the financial security of retirees.

Key Quotes and Insights

• "We have to rethink the range of policies that tend to assume the elderly will not be in the labor force."
• "The loss caused by retirement is not one-time, but increases with the length of the retirement spell."
• "The induced work could make up the extra fiscal cost through higher tax revenue on employment income."

Summary Table

Final Thoughts

The paper calls for a re-evaluation of the current retirement income system and its impact on older workers. It argues that policies should support the choices of individuals and employers to remain in the labor force, rather than create unintended barriers. This is especially important given the aging population, labor shortages, and the evolving nature of work.