Canada is at a demographic peak, but the descent will be swift and steep.
A greater proportion of people are working now than ever before. The largest chunk of the population, the baby boomers, are in their highest earning years and only a tiny sliver of that cohort has slipped into retirement. Their relatively fatter salaries are filling tax coffers and funding social programs. And years of low birth rates have meant significantly fewer dependent children to support than in decades past.
“This is the golden age,” according to McMaster University economist Arthur Sweetman.
But the release of new 2011 census numbers this week will show that the period of “peak people” is about to end. Canada’s demographics are at an inflection point, as the number of people of retirement age begins to grow at a faster rate than any other group in the next few years.
This country is still in much better demographic shape than nearly any other in the G8, with only about 14 per cent of its population over 65, compared with more than 20 per cent in Japan, Germany and Italy. And with nearly 70 per cent in the working ages of 15 to 64, Canada ranks ahead of all of those nations except Russia.
But much of its current advantage is explained by the relatively large size of the baby boom in Canada, according to Western University demographer Rod Beaujot. That advantage is about to erode. As the baby boom retires, the ratio of the employed to the not-employed will fall, possibly for a very long time.
“It’s inconceivable that in the future we will see anything but a decline in employment rates,” said Prof. Beaujot.
For Stephen Harper’s government, that shift has a number of important policy implications, from pensions to health care. The government has already proposed a gradual rise in the age of eligibility for Old Age Security to 67 years from 65. Although an aging population is often cited as a reason to cut spending, governments have known the implications of an aging population for more than 30 years. It is among the least surprising developments a government could face.
“We should have been saving by keeping taxes higher, and not cutting things like the GST, so we would have enough to pay for these social programs,” Prof. Beaujot said.
The prime example is health care. Its funding formula is a pay-as-you-go system, where the taxes collected in one year pay for the services provided. It could have been placed on much firmer footing if governments hadn’t cut taxes when taxpayers were abundant, Prof. Beaujot said. Now the key to sustaining expensive social programs will be getting even more people working, particularly those who have traditionally been excluded from work or underemployed. There are already signs that many people over 65 intend to work longer, some of them out of financial need, others because they feel too young and healthy to stop.
“We need to employ people longer and get people on the fringes of the labour force, disabled people or aboriginal groups, for example, more involved,” Prof. Beaujot said.
Many of the barriers that prevent disabled people from working to their potential are frustratingly persistent. Melanie Moore lost her sight at birth and went on to earn a degree in social work from Carleton University. Since entering the work force 13 years ago, Ms. Moore has spent roughly one of every two years unemployed. Unable to find an employer willing to hire her near her home in Hamilton, she commutes four and a half hours daily to a job at the Centre for Independent Living in Toronto. She’s covering a maternity leave, however, and expects to be unemployed again in September. She will continue to look for a new job, but many people with disabilities do not or cannot. Work-force participation rates are about 25 per cent lower among the 14 per cent of Canadians who identify as having a disability.
“The prospects for work aren’t good. When I think about this contract ending, my stomach turns,” Ms. Moore said.
Many of the jobs she would like require a driver’s licence, which she says is unfair. Those employers won’t even look at her application, she said. It’s just one example of a barrier that disabled people face that could be tackled with a more imaginative approach, she said.
“It’s so frustrating,” she said. “And it’s not unusual. It’s a chronic problem and it’s not well understood.”
An important implication of this impending demographic shift is the possibility of labour shortages. Forecasts have suggested as many as a million jobs could go unfilled over the next decade. Provinces and business leaders have suggested increasing immigration rates to help fill some of the shortage, but the federal government has kept rates fairly steady at about 250,000 newcomers a year.
The new census numbers will also reveal how regional differences could be exacerbated by the aging of the population. Already Atlantic Canada has a significantly higher proportion of people over 65, while Alberta is considerably younger. That could worsen in coming years under proposed changes to the Employment Insurance system that will push working-age people toward jobs in the young and booming West. Today, projections show that nearly one in three people in the Atlantic region will be over 65 within two and a half decades. In Alberta, that number will be closer to one in five.