Age Discrimination in Employment in Canada

By Gunderson, Morley | Contemporary Economic Policy, July 2003 | Go to article overview

Age Discrimination in Employment in Canada


Gunderson, Morley, Contemporary Economic Policy


I. INTRODUCTION

As is the case in a number of developed countries, issues of age discrimination are of increasing policy interest in Canada. The reasons pertain to demographics and the aging population, pension viability, impending labor shortages, restructuring to the information economy, phased retirement, human rights, unjust dismissal, mandatory retirement, and the accumulation of seniority-based wage increases and service credits for pensions.

The workforce is aging, with the Baby Boom age population (born shortly after World War II) now in its mid-50s, the age of early retirement, and approaching the age of normal retirement of around 65 years. Increasing life expectancy means that issues of age discrimination will be prevailing for older workers for a longer period of time.

Given this aging population and the fact that a smaller portion of the population is of working age, concern exists over the viability of pay-as-you go schemes, such as public pensions (e.g., the Canada/Quebec Pension Plan). In such schemes, payroll taxes from the current generation of employees pay for the benefits received by retired employees with the expectation that when the current generation retires, the new workforce pays for their retirement benefits. Such schemes work when there is stable population and productivity growth; however, if (as is the current case) the retirement age population is growing faster than the working-age population, and productivity growth is stagnant, then the viability of this social contract becomes severely strained because large intergenerational transfers can be involved. This is especially the case because the aging population also has extensive medical expenses. In such circumstances, negative impressions of older persons as a drain on the system may foster discrimina tion against individual older persons. As well, there may be pressure to facilitate the continued employment of older workers so that they can contribute to the system and draw less from it. Protection against age discrimination can facilitate that continued employment.

Possible impending labor shortages, including those resulting from the smaller number of younger workers in the labor force, is drawing attention to older workers as a potential source of labor supply. This is augmented by the realization that much of the recent downsizing led to a loss of older workers who had an important role in mentoring, providing institutional knowledge, and networking with other organizations.

The information economy and knowledge work is having differing impacts on older workers. On one hand, they can facilitate continued employment because it is less physically arduous. On the other hand, it gives rise to skill obsolescence and the requirement to learn new technologies, especially those associated with computers. To the extent that older workers find it more difficult to adapt to such technological change, they may have a shorter expected working life over which to amortize the cost of relearning.

There is pressure from employers more generally for a flexible and adaptable workforce, some of which may be well suited to older workers. This is the case, for example, with respect to part-time work or self-employment to facilitate phased retirement, as well as with respect to broader-based job classifications that involve a wide range of tasks that may suit older workers given their range of experience. Other requirements for flexibility may be more difficult for older workers.

There is general agreement in policy circles that it is desirable to facilitate the phased transitions into retirement for older persons, rather than to have abrupt shifts from work to full retirement (Gunderson, 1998). This is especially the case when employees may have an incentive to work full-time and even long hours prior to retirement to build up pension benefit accruals that are related to the person's final year earnings. …

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