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Ageing workers called 'threat' to productivity: C.D. Howe warning: Study says pushing back retirement age
won't halt damage
National Post
Wed 14
May 2003
Page: FP4
Section: Financial Post: News
Byline: Kate
MacNamara
Source: Financial Post

Ageing workers pose a "dramatic threat" to Canadian
living standards, according to a study released yesterday by a national
research body.

The C.D.
Howe institute
warned that, given Canada's greying population, substantial improvements in
labour productivity are needed to maintain current economic growth rates over
the coming four decades.

However, those improvements may not materialize, the study suggests.

Many analysts expect that gains in work effort, such as encouraging older
workers to work longer, can counter-balance the pressure arising from an older
population, with a rising ratio of dependents to workers.

But, the C.D. Howe study warns
against counting on such productivity gains because workers more than 60 years
old tend to be less productive than younger employees.

"There are those who think that productivity will save us in the future.
I'm saying that, given the demographics, [that the average age of workers is
climbing] we shouldn't be that optimistic. Older workers are less productive
and work fewer hours [than younger ones]," said Yvan Guillemette,
policy analyst and author of the Institute study.

Mr. Guillemette estimates that the Canadian workforce will increase from
16.9-million people (in 2002) to 18.5-million in 2041.

Less than 5% of the current workforce is over the age of 60.

But his research shows that in roughly 25-years that proportion will
double.

"Lower productivity in older workers is going to increase the importance of
factors like capital accumulation," said Mr. Guillemette, who noted that a
policy environment that favours saving and capital accumulation may be
Canada's best hope for counteracting its declining birth rate.

He noted there no direct policy instrument that affects productivity and
dismissed such measures as Ontario Premier Ernie Eves' promise to ban
mandatory retirement at age 65 as having, "very little overall effect."

Ontario, he noted, lags behind Quebec and Alberta in abolishing the
mandatory retirement age. And most people retire before they are forced to by
law, said Mr. Guillemette --the average retirement age in Canada is about 61.

Shirley Seward, CEO of the Canadian Labour and Business Centre, welcomed
the study, but said she remains more optimistic that the labour participation
of such groups as aboriginal Canadians and immigrants can mitigate demographic
trends in the coming decades.

Immigrants account for 70% of the net gains in labour force numbers in
Canada, she noted. In 10 years, they'll account for fully 100% of the
country's labour force gains. "That's some quarter of a million people a year
that are grossly under-used at the moment," said Ms. Seward.

"Many [new immigrants] have credentials that we desperately need, they're
foreign trained doctors or nurses, and yet they've come here and they're
working as labourers." Better use of skills, said Ms. Seward, could release
much greater productivity.

Still more optimistic about Canada's future productivity was David Foot,
University of Toronto demographer and author of Boom, Bust & Echo.

"Full marks for looking at the long term but we're forgetting that
Canadians have one heck of a decade coming up," he said.

The Baby Boomers -- the first of whom were born in 1947 -- are hitting a
productivity peak in their late 40s to early 50s, as their children leave
home, Mr. Foot said. Their children, the Echo Generation, are in their teens
and set to join the workforce in the next 10 years -- and a person's first
productivity peak typically comes in their 20s, before families are started.
"We're actually set for a productivity boom in the next decade," Mr. Foot
said. "I really think we need to keep things in perspective."

Edition: National
Story Type: Business
Note:
[email-masked]
Length: 590 words
Keywords: Population;
Employees; Age; Productivity; Economic forecasts; Statistics; Canada