Retirees set to outnumber Canada’s youth for the first time

The Globe and Mail

Maggie Dalecki, an honours philosophy student at the University of Manitoba, says her goal is to the kind of meaningful work she’s always wanted, but she doesn’t know how long she will have to wait. is photographed in the university's main library in Winnipeg Wednesday, February 13, 2013. She expects her career path will be more complicated than her mothers, she expects her real job won't arrive until she's much older and she doesn't expect to attain the same standard of living. (John Woods for the Globe and Mail) (JOHN WOODS/GLOBE AND MAIL)

For as long as statistics have been kept in this country, the number of young people entering the work force has always exceeded the number nearing retirement.

Not any more.

At some point this year, the number of 15- to 24-year-olds will slip below the number of 55- to 64-year-olds for the first time, according to Statscan’s demography division. That represents a major symbolic threshold for a society just beginning the slide from a demographic golden age.

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Canada was always able to count on the bulge of its youth population to contribute to growing labour capacity and to gains in wealth and living standards. But as fertility rates dropped in recent decades and the baby boom aged, the two cohorts gradually drew closer in size. The younger group will briefly outnumber the older one again in the 2030s, but projections show they’ll be nearly equal in size well beyond the middle of this century.

The shift is a major worry for governments and business. On a basic level, it indicates that, with more people at the age of exit than entry, the work force will grow at a much slower rate. That will have a doubly damaging impact on public coffers; pension and health costs will rise at the same time that growth in the tax base slows. Meanwhile, employers are going to struggle to find workers in some areas, a prospect they identify as a major threat to productivity.

For people on either side of this ratio – those approaching the final phase of their careers and those whose working life is just beginning – the spectre of an aging society raises important questions.

Maggie Dalecki is a 21-year-old fourth-year philosophy student at the University of Manitoba. She’s nearing graduation and considering a career in academia or law.

Recently, she watched a documentary about youth unemployment that described her cohort as a jobless generation. It made her a little uneasy, she said. Her goal is to one day find the kind of meaningful work she’s always wanted, but she doesn’t know how long she will have to wait. Will the baby boomers make way for her generation, or will they hold onto the best jobs longer than any group before them?

And if the boomers don’t work into their late 60s, will she and her peers be forced to support their parents to an extent their predecessors did not?

“I’m nervous but I’m still hopeful,” Ms. Dalecki said.

While the state of the economy can appear discouraging to young people, those in Ms. Dalecki’s cohort are graduating with one major factor in their favour: with less competition at the entry level, it’s possible that a demographic effect could actually lift wages.

“One thing you do see in predictions of longer-run models when you have this demographic bulge moving through and you have fewer young people is that wages will rise for those young people who are entering,” said Kevin Milligan, an economist at the University of British Columbia.

“It’s not to say that everything is going to be easy for this generation but there is one thing pushing to the positive side of the ledger.”

Ms. Dalecki is prepared for the possibility that, contrary to the expectation of so many preceding generations, she and her peers may never reach or exceed the standard of living enjoyed by her mother’s generation. It’s a stark thought. Her mother, Anna Ziomek, says it seems a near certainty.

Dr. Ziomek is a 58-year-old emergency-room physician. She’s concerned about what awaits her daughter’s generation, but her own circumstances are quite different. She is now at an age when, historically, large numbers of people begin to retire. In 2012, the employment rate for 50-to-54-year-olds was nearly 80 per cent, yet it was below 50 per cent for 60-to-64-year-olds. Life expectancies have risen to the point that today’s 65-year-old can expect to live to 85, according to Statscan. If most Canadians continue to retire between the ages of 55 and 65 (the average is closer to 64), today’s retirees may spend a long time drawing on pensions and contributing less to tax coffers and economic growth. Dr. Ziomek, though, said retirement holds no allure for her.

“I will probably work well into my late 60s,” she said. “I’m very active in my profession in all kinds of things, I’m positive about emergency medicine and I have no outside interests other than gardening, which, if you live in Manitoba, is a very short season.

“I’ve always said I’d like to die on the job.”

In recent years as retirement funds have suffered in the recession, increasing numbers of Canadians have continued to work past the traditional retirement age. Since 2000, the employment rate of 65-to-69-year-olds has gone from one in nine to nearly one in four.

But working in a demanding environment like the ER, where shifts can run around the clock, is likely not something she can do forever, she said. She plans to eventually adjust her practice to something less physically taxing.

One of the major challenges for employers over the next decade will be how to deal with the loss of so many senior workers. Some business groups are predicting labour shortages will slow the pace of economic growth. Prof. Milligan said businesses will have to learn to work with the labour force they have, not the one they used to know. They should strongly consider instituting flexible work policies to keep capable people on the job past the age of 65, he said “There’s a lot of people there and a lot of unused work capacity. … We want to make sure that there aren’t people sitting at home because companies don’t want to be flexible,” he said.

Frank Trovato, a demographer at the University of Alberta, said that the decline in the number of young people could set off a chain reaction that resonates through future generations.

“Relatively fewer young people means probably fewer children. Fertility could decline even further, which could intensify the aging of the population.” said Prof. Trovato.

With low fertility likely to be a sustained trend in Canada, one of the principal tools to keep the population growing, rather than shrinking, is immigration, he added. Over the next 20 years, nearly all labour-force growth will be due to immigration.

“A country has to ask itself hard questions about whether it wants to open itself up to more immigrants,” Prof. Trovato said.

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