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International Business Boomer retirement wave will leave Canadian businesses struggling

A man with greying hair wearing a tie looks at his reflection.

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Executive Pulse seeks input from Canadian leaders on vital issues that affect our business and economy.

This year marks the first time that this country has more people older than 65 than it has people younger than 15, according to Statistics Canada, and that trend is only going to increase in the years to come. In the work force, though, the percentage of retirement-age Canadians who continue to work past 65 has doubled to 14 per cent, and the labour participation rate of those 60-64 is at 55 per cent. But at some point the shift of the baby-boomer generation to full-time retirement will present a work-force problem for Canadian businesses, particularly small- and medium-sized ones, and the time for planning is now, say business leaders. Charles MacQuarrie, the owner of MacQuarries Pharmasave drug stores in Nova Scotia, and Wendy Tayler, president and part-owner of Yukon-based airline Alkan Air, along with a Whitehorse Ford dealership, offer their thoughts on the situation.

How important is succession planning for Canadian businesses?

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Charles MacQuarrie: They say the time to begin succession planning is the same day the hire is made. It is one of many important things on the to-do list for any business, of any size. It is, however, a difficult one to do, especially in family businesses.

Wendy Tayler: Succession planning is key in Canadian businesses of any size. However, it seems to be a bigger issue in small- to medium-sized businesses where often succession is left too late, which exposes the businesses and all of its employees to the risk of the business being eliminated or downsizing. It is a greater issue now as a large sector of businesses will enter this phase together with boomers retiring. We've already started to address that because it is a challenge to a degree. Right now we're bringing two individuals online that are classified as foreign workers.

As business leaders, how concerned are you with Statscan predictions that by the 2020s the labour force will only grow by 0.5 per cent annually?

WT: I am very concerned about this reality for my businesses but also for Canada as a whole. We are acknowledging the problem now but we have yet to identify a solution.

CM: It is a concerning prediction that the demographics are working against us, but it seems that businesses do have the ability to adapt over time and that is likely what will happen.

Given projected work-force shortages, is immigration a way to counter our aging population? Or is immigration alone not enough to make up for the retirement rates that may shortly increase to about 400,000 a year?

CM: It appears that younger immigrants can offset the aging Canadian population and bring a new, diverse energy to the Canadian work force.

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WT: I believe immigration is vital to the sustainability of our economy and I would suggest that it needs to be treated as one of the highest priorities in government. However, even with a healthy functional immigration program, we will not be able to keep up to the retirement rate in this country.

Can businesses rely on older workers to fill work-force gaps?

CM: If 60 is the new 50, why not? Many seniors want to or have to work; in our business, some of our best employees are in this group.

Given a potential work-force shortage, have companies become too lean through layoffs and cutbacks?

CM: Competition, government regulations, and the economic realities of 2015 have driven many companies to resize. These factors will determine if companies are right-sized for today and into the future.

WT: We're not looking out to that baby boomer scenario that's now sitting at that 10- to 15-year window from where we are today. Had we seen that, if we had a 15- to 20-year view at our organizations, we might have done things differently to keep some of those resources around.

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Do younger workers have the skills businesses need?

WT: We've really pushed quite aggressively at the high-school level the concept of university graduation. Bachelors and masters programs are ideal for certain individuals and I think it's really important that our universities are accessed by a percentage of our population. However, there are some really good jobs in the trades and, unfortunately, not enough people are even considering those fields and it's something we're working very hard on. I have high-school graduates come through and get an understanding of our business here. We have a program – Yukon Women in Trades and Technology – that has gone through the aviation company as well as my Ford dealership to really look at the trades that are available. There are so many jobs in plumbing, electrical, automotive engineering and aviation engineering that are not being filled locally. I'm not sure whether or not at this point it's a shortage of Canadian youth as much as it is a shortage of Canadian youth focused on trades. That's really a government push that needs to be rethought.

CM: Recently a Nova Scotia manufacturer was quoted as saying, "We are basically graduating people from high school that are functionally illiterate." Obviously this is not only a problem when employees need to properly read a safety manual, but also to compete with the rest of the world. When you don't have to attend class, or even do any of the work, and still pass, what is this teaching our younger generation? You don't have to show up on the job? You don't have to do what your manager asks? What message is this sending?

Can automation/software fill the gap?

CM: Maybe partially. But will Canadians be able to design, build, and operate this automation and software?

WT: I don't think it will replace the workers we have but it might allow me to have these people focused on the tasks that can't be automated. We're already doing that; we've got seven different software programs on the operations side of our company. I think companies are already there, but I think we're going to have to all continually find ways to increase the efficiency of the software programs we're already using or upgrade them so that any task that can be automated allows the intellectual capacity in our organizations to focus on the critical pieces.

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What are the recruitment challenges that Canadian businesses currently face?

CM: Having the right people with the right skills in the right place to fill a position is complicated by changing economic pressures and realities. People can move to take a new job, but not everyone wants to.

WT: One of the major barriers to recruitment is the cumbersome process for bringing foreign workers into our country. The process needs to be streamlined and the time from application to employee on site needs to be shortened significantly. On the automotive side we've had real challenges finding technicians. As a result, my business partner that runs the dealership has been going through the foreign workers program and it's been very cumbersome and very challenging. It will probably take 12 months before she gets through the entire process. I believe, in light of the baby boomers retiring, we've got to get a lot better as a country to put a seamless process in place to allow businesses to go out and access international workers. Our government needs to focus on immigration as a whole in order to meet the needs that are coming, whether it's 10 or 20 years down the road. We can't prepare for it a year out.

Answers have been edited and condensed.

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