Over the next decade, more people are leaving rather than entering the Canadian workforce
The latest labor force survey from Statistics Canada revealed that around 2.7 million Canadians aged 15 to 24 were employed, while over 4.4 million individuals aged 55 and older held jobs. This stark contrast, with 4.7 million younger Canadians compared to 12.4 million older individuals, projects a significant demographic shift in the Canadian workforce over the next decade, with more people leaving than entering due to the aging population.
“There are potentially more people prepared to leave the labor force because of retirement than there are entrants to replace these workers,” says Jane Badets, senior adviser at Environics Analytics.
New data from Environics Analytics also revealed that Canada's senior population is set to exceed 11 million by 2043, making it the fastest-growing age group in the country.
Stephen Tapp, chief economist for the Canadian Chamber of Commerce, highlighted the existing labor shortages across sectors due to the aging population. The imminent retirement of the baby boomer generation, born between 1946 and 1964, without a sufficient influx of younger workers, is expected to exacerbate these shortages in the coming years.
“Things are getting tighter and more difficult...It will get worse over the next 10 to 15 years,” Tapp says in an interview with CTVNews.ca.
The repercussions of an aging workforce
Research from the Fraser Institute found that for each 10 percent increase in the senior population (aged 60 and older), GDP per capita decreased by 5.5 percent.
Sectors such as healthcare, construction, and transportation are anticipated to experience more labor shortages. Canada's healthcare sector, already facing challenges, is expected to be largely affected with the increased demand for services as the population ages.
As older employees leave the workforce, transferring knowledge to younger workers becomes a challenge. Tapp emphasizes the importance of adequate training to ensure a smooth transition, including technical training for older workers adapting to new tools and technology.
“If we have older people staying in the labor force longer, they're going to need to stay up on their on their skillsets and to be retrained more frequently than they would have been before,” Tapp says.
While the labor market tightens, Tapp predicts an increase in wages, with employers offering higher rates to attract and retain employees. He anticipates annual wage increases exceeding two percent to counteract inflation.
Some Canadians are already adapting to the changing landscape, with data showing nearly one million individuals aged 65 or older working in 2022, constituting five percent of the total labor force. The average retirement age has also increased to 64.6 years — a trend that is expected to continue.
As Canada grapples with an aging workforce, the role of immigration comes to light. Over the past decade, the federal government has increasingly relied on immigration to address labor market gaps, particularly in sectors such as accommodation and food services, transportation, and health services. Recent announcements indicate plans to prioritize skills and work experience in fields facing shortages.
However, the effectiveness of these policies in strengthening the workforce remains uncertain, according to political science professor Ted McDonald. The ongoing demographic shift poses challenges that policymakers, employers, and workers will need to navigate in the coming years.
