Canada is expected to see more workers retiring than joining the workforce in the coming decades, a trend driven by the country’s growing senior population, as indicated by new data from Statistics Canada. This demographic shift is anticipated to aggravate existing labor shortages and potentially lead to increased wages.
As of November 2023, Statistics Canada’s labor force survey revealed about 2.7 million employed Canadians aged 15 to 24, in contrast to over 4.4 million employed individuals aged 55 and older. The total populations of these age groups stand at 4.7 million and 12.4 million, respectively. Jane Badets, senior adviser at Environics Analytics, notes that the larger older population suggests more impending retirements than new workforce entrants.
According to Environics Analytics, Canada’s senior population is projected to exceed 11 million by 2043, marking it as the fastest-growing age group. This aging population contributes significantly to labor shortages across various sectors, explains Stephen Tapp, chief economist at the Canadian Chamber of Commerce. The impending retirement of baby boomers, coupled with a lack of young workforce entrants, is likely to exacerbate these shortages.
These demographic changes are not only impacting labor availability but also economic growth. A RAND Corporation study found a correlation between an aging workforce and reduced per-capita GDP. For every 10 percent increase in the population aged 60 and older, GDP per capita fell by 5.5 percent. The Fraser Institute also reported a decrease in real GDP per capita growth rate with every 10 percent rise in the senior population.
Further complicating the situation is the increasing number of Canadians retiring each year, as shown by the Canadian Centre for Policy Alternatives. In the year ending August 2022, 73,000 more people retired than in the previous year.
Health care and construction are among the sectors most likely to experience severe labor shortages. Ted McDonald, a political science professor at the University of New Brunswick, highlights the direct impact of these shortages on patient outcomes and the broader economy. Statistics Canada data shows high job vacancy rates in health care, construction, and accommodation and food services.
The ratio of older to younger workers varies across industries, with certain occupations like bus driving having a higher proportion of older employees. Meanwhile, employment rates among Canadians born in Canada aged 25 to 54 have risen by two percent from 2010 to 2021.
As older employees exit the workforce, knowledge transfer to younger workers becomes a challenge. Tapp emphasizes the importance of training, both for new hires and older employees who might continue working past 65. He also anticipates wage increases as employers struggle to attract and retain workers in a tight labor market.
Artificial intelligence technology is likely to play a growing role in businesses seeking to automate processes due to labor shortages, McDonald suggests.
Despite the aging workforce, some Canadians are opting to delay retirement. In 2022, nearly one million Canadians aged 65 or older were still working. The average retirement age has risen from 60.9 in 1998 to 64.6 in 2022.
CTVNews.ca spoke with Canadians like Anita Newson and Stewart Turnbull, who are considering delaying retirement due to financial concerns, highlighting the personal impact of the changing labor market landscape.