Workers over the age of 55 could make up more than a quarter of Canada’s labour force by 2036, according to new labour force predictions from Statistics Canada.
Despite this trend, the agency predicted the country’s workforce participation rate will continue to decrease from its peak of 68 per cent in 2008 to 63 per cent in 2036. The report attributed the decline to population aging as baby boomers move toward retirement. The last of the boomer cohort will reach age 65 in 2031.
Read: Labour market participation falls to 17-year low as fewer working-aged Canadians work
Statistics Canada said the lowered workforce participation could have important consequences for Canada’s economy, including labour shortages in certain sectors and pressures on fiscal revenues that fund key economic and social services. However, it noted a large immigrant population and the increasing number of working seniors will partially mitigate the decline.
“We’ve seen quite large increases in the participation rate of Canadians 60 to 64 years of age and the same for those aged 65 to 69 and even those above 70,” says Laurent Martel, the director of Statistics Canada’s demography division. The changes to workforce participation will look very different across the country, he adds.
Read: Canada facing $13.4-trillion retirement savings deficit by 2050
Looking at 18 regions across Canada, Statistics Canada found large metropolitan areas, like Toronto, Montreal and Vancouver, which have more diverse working populations and a higher percentage of young workers, won’t see as profound changes to workforce participation.
Non-metropolitan regions of Quebec and Atlantic Canada, as well as Thunder Bay and Sudbury, Ont., are expected to experience the sharpest decreases in the labour force, says Martel.
“These regions are older than other regions. They’re experiencing negative natural population growth, there’s little immigration and also in these regions there are often young adults moving away to urban centres.”
The non-metropolitan regions of Atlantic Canada are expected to see the highest (32 per cent) percentage of workers over the age of 55 by 2036.
As more Canadian workers get older, changes in employers’ retirement support could exacerbate a worrying picture, says Scott Anderson, regional vice-president of employee benefits at Hub International.
Read: Canadians’ retirement confidence drops as life expectancy rises
The declining popularity of defined benefit pension plans and corresponding rise of defined contribution arrangements and group registered retirement savings plans have contributed to seniors being unprepared for retirement, he says. Group RRSPs are particularly insufficient tools when used alone, he adds.
“When employers start a group RRSP instead of a defined contribution plan, typically we see people who need the money most withdraw funds during their employment,” says Anderson. “They access it multiple times and don’t have enough money to retire.”
As more Canadians find themselves unprepared for retirement, he notes, they “modify what regular retirement looks like” by working longer full time or taking on a similar job on a part-time or contract basis.
Several other reasons that seniors continue to work past retirement age, says Martel, include longer life expectancy, rising debt levels and labour shortages in certain industries that prompt employers to encourage their aging employees to stay longer.
Read: Employers challenged by trend towards delayed retirement