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Canada: Buzz Hargrove

By Buzz Hargrove, the Globe and Mail

December 29, 2003



Prime Minister Paul Martin has called for a national debate on the merits of mandatory retirement. Any public-policy debate about mandatory retirement needs to recognize the complex dynamics that exist in workplaces. Part of that complexity involves the relationship between younger and older workers, the constant concern of employers for efficiency and productivity, and, within unionized workplaces, the package of rights and benefits that form a collective agreement.

There are important societal benefits in maintaining the ability of employers and unions to freely negotiate whether or not mandatory retirement makes sense for their particular workplace. Such agreements help considerably in ensuring orderly employee turnover, and providing the opportunity to allow younger to replace older workers. They provide a certain degree of job-security protection for younger workers, especially during periods of economic downturn.

It is unlikely that abolishing mandatory retirement will have a significant influence on the age of retirement. The evidence from those jurisdictions that have abolished mandatory retirement suggests that there are very few workers who want to work longer. Indeed, the overwhelming trend has been toward earlier retirement, and that would be even more pronounced if our pension system provided adequate retirement incomes. The fact is that the average retirement age in Canada has been steadily declining for years.

While abolishing mandatory retirement is often couched in terms of providing the opportunity for older workers to continue their employment, the irony is that such actions could have the contrary effect of forcing some workers out of their jobs even before age 65.

Many employers will feel compelled to monitor older workers much more closely than they do today. Without the assurance that an older worker is only two or three years away from leaving the workplace, many employers will be much stricter in evaluating his or her performance; they will be less likely to ignore any decline in terms of productivity; they will be much tougher in assessing absenteeism for health reasons; and, as a result, they may become much more prone to discharging such workers at an earlier age, in anticipation of avoiding human-rights complaints at age 65 or later.

Studies from the United States have concluded that the abolition of mandatory retirement has had a limited impact on the employment of older people, but it has also led employers to ". .  . introduce new systems of performance monitoring to ensure that they are in a position legally to dismiss the least productive employees."

Although mandatory retirement is often described in the language of "individual choice" and "freedom from discrimination" some of its opponents believe its abolition creates an opportunity to cut back on pension benefits and other programs for seniors, as well as substituting for the failure to provide adequate training and skills programs. A recent commentary on Canada's Department of Justice website makes this explicit: "[Eliminating mandatory retirement] would help meet the current and expected labour shortages in many occupational categories and also ease off the growing financial pressures on our public-pension and old-age assistance plans."

The experience in the United States provides a glimpse of what may be in store for us. Rather than serious reform of social security, U.S. governments have opted to deal with perceived pressures on their public program by extending the age at which full benefits would be available to workers. There has already been the suggestion that Canada should consider going beyond age 65 as the minimum requirement for full benefits, a suggestion that will be much easier to implement if mandatory retirement is abolished.

The most important issue for the vast majority of older workers is not the rhetoric of freedom or choice, but rather the adequacy of post-retirement income. For those workers who were relying on RRSPs, mutual funds or defined-contribution pension plans, the severe decline in the stock market may mean that many of them will have to continue working, not out of choice, but because they can't afford to retire. For most workers, a real choice requires a public-pension system that allows them the opportunity to retire in dignity, and that means an expansion and improvement to the Canada and Quebec Pension Plans as well as Old Age Security.

Similarly, the overwhelming concern of workers who belong to defined-benefit pension plans is not about their freedom to work longer, but about the security of their retirement income. With the exception of Ontario (which provides limited and inadequate protection in any case), no jurisdiction in Canada has any legislative provision to protect or guarantee the pensions that workers and retirees have accrued over their working lifetimes. When employers fail to meet their commitments, either through bankruptcy, insolvency or just by winding up their pension plans, workers and retirees are often faced with sudden cuts to their incomes. The knowledge that they will have the supposed freedom and choice to work will be of small comfort to them.

Rather than calling for the abolition of mandatory retirement, Prime Minister Martin would be providing a much greater service by making a public-policy commitment to ensure the adequacy and security of retirement income, both for public and employer-sponsored plans.

Buzz Hargrove is president of the Canadian Auto Workers union.

 

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