Labour market participation has fallen to a 17-year low as fewer working-aged Canadians are participating in the workforce, a new study from Statistics Canada has revealed.

According to the federal agency, the labour market participation rate fell to 65.7 per cent in 2016 from 67.4 per cent in 2007. While the population aged 15 and older increased by 3.1 million between 2007 and 2016, the number of workers rose by only 1.6 million.

Part of that is due to people aged 55 and older accounting for an increasingly large proportion of the working-age population. In 2016, they made up 36 per cent of that population, up from 30 per cent in 2007 and about 25 per cent in the 1990s.

At the same time, people aged 25 to 54 made up a smaller proportion of the working-age population at 49 per cent in 2016. That number was down from 54 per cent in 2007. Statistics Canada projects that number will continue to decline and may drop to 46 per cent by 2026.

The proportion of people aged 15 to 24 also fell during the time period, from 17 per cent in 2007 to 15 per cent in 2016. In 1976, that age group accounted for more than a quarter of the population.

Read: Discussion about retirement age resurfaces as census shows big rise in senior population

Aging baby boomers, an increase in life expectancy and low fertility levels have all contributed to the rise in the population of older Canadians.

Workplace participation rates have, however, increased among those aged 55 and older, rising to 38 per cent in 2016 from 24 per cent in 1996. More specifically, the participation rate for those 55 to 64 was 66 per cent in 2016. The participation rate was 14 per cent for those aged 65 and older.

However, the rate hasn’t increased enough to offset the declining share of younger Canadians in the workforce. As a result, the economy may stagnate, the study warns. And older workers can create challenges for employers, such as being able to work reduced hours and requiring more benefits support for health issues.

The participation rate for core working-age Canadians was 87 per cent in 2016, which hasn’t changed much since 1996. The rate for youth, on the other hand, dropped three percentage points.

Read: Comorbidity a growing concern as Canadian workforce ages

Apart from aging, factors that affect labour market participation include education and family. As more Canadians pursue post-secondary education, the proportion of youth in the workforce will drop; those with more education are more likely to work longer; childcare responsibilities may encourage young parents to leave workforce, whether temporarily or permanently; and spouses may aim to have similar work and leisure hours. That is, older men are more likely to stay working if their spouse also has a job, the study noted.

Hourly wages, local job opportunities, debt levels and health issues also play a role in workforce participation.

“Recent research has indicated that debt levels have increased among older Canadians, and that older seniors with a mortgage were far more likely to work than those without a mortgage,” the study noted.

Read: Employers challenged by trend towards delayed retirement 

Copyright © 2020 Transcontinental Media G.P. Originally published on

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