Benjamin Tal is the managing director and deputy chief economist at CIBC.
You see it on city streets, in restaurants of quiet towns, and in rural enclaves: Canadians are getting older. Medical advances have resulted in longer life spans, but the aging population is putting a strain on social services and increasingly, the burden of caregiving is falling on family members.
Statistics show that in the coming years the weight of caregiving for seniors will only intensify. A decade ago, the share of Canadians 65 and and older hovered around 14 per cent, before rising to 17 per cent, where it currently sits. You don’t need to be an economist to know that there will be a ballooning in the number of older Canadians. As well, the pace of change will accelerate over the coming decade to reach roughly 22 per cent of the population by 2027.
Family members will bear the brunt of the costs associated with that demographic trend, including both out-of-pocket expenses and loss of labour income.
Close to two million Canadians, or 14 per cent of those with parents older than of 65, incur care-related out-of-pocket costs. On average, that amounts to $3,300 a year, for every caregiver, or an annual cost of just more than $6-billion to the overall economy.
That cost is not distributed equally. Those with lower incomes bear more costs when it comes to aging parents: Canadians earning less than $50,000 a year spend on average 30 per cent more than those earning more than $100,000. This widens an already large income gap, further penalizes low-income Canadians and presents an even more troubling prospect as they themselves age.
Out-of-pocket costs are just the tip of the iceberg. The greatest damage is evident in the time Canadians take off their work week to care for aging parents. In the initial months of caregiving, the likelihood of the caregiver being absent from work increases by more than 20 per cent, and their employment rate falls by just under 2 per cent. Close to 30 per cent of workers with parents over the age of 65 take time off work. Caregivers sacrifice roughly 450 working hours a year, for an average of eight hours a week. In the context of a full-time job, that equates to a full day – an exhausting situation to maintain long-term.
And again the picture is far from symmetrical. Women bear the brunt of this responsibility. They take 30 per cent more time off work than men to care for their aging parents. That cost is exacerbated by the fact that earnings for women peak later than they do for men, due to early career gaps related to caregiving of another kind.
Governments are beginning to react. The 2017 federal budget abolished three caregiver tax credits and replaced them with a better-funded caregiver credit program. Manitoba, Quebec and Nova Scotia have implemented a variety of additional targeted financial supports for caregivers, while Ontario followed the example set by the federal government and combined its current tax credit into an Ontario Caregiver Credit.
But this is just a drop in the bucket. Much more needs to be done. There needs to be a national formal recognition of caregivers, with a common definition to provide the foundation for formalized support. There is also an urgent need to simplify the caregiver support system. As it stands now, that system is highly fragmented and adds unnecessary stress to an already stressful situation.
A better and more co-ordinated approach toward providing caregivers with adequate subsidized training is also greatly needed. While the federal and provincial caregiver tax credit programs are helpful, the do not go far enough. Their tax incentives remain non-refundable – claimable only on taxable income. This penalizes low- or no-income caregivers. More is needed to be done to guarantee that the time taken off for caregiving does not hinder future pension entitlement. What’s more, the private sector should look at additional options of providing caregivers with flexible working arrangements and leave policies.
Time is not on our side. Today’s direct and indirect cost of caregiving is close to $33-billion a year. That cost will mushroom by more than 20 per cent over the next decade. Inaction is not an option.