The effects of boomer retirement
The reference scenario mainly uses the increases in immigration – which reached record levels in 2022 and 2023 – over the last decade plus to craft its prediction. In fact, from July 1, 2022, to July 1, 2023, Canada welcomed 468,817 immigrants. As well, the increase in the number of NPRs during this period is the largest since comparable data became available.
The study's various scenarios indicate that the growth in Canada's labour force should accelerate in the short term because of recent increases in permanent and temporary immigration.
According to the reference scenario, which assumes that 500,000 permanent immigrants will be admitted each year and assumes a constant proportion of NPRs amounting to 5% of the total population as of 2028, the labour force should continue to grow in Canada, from 21.7 million in 2023 to 26.8 million in 2041. By comparison, the labour force increased from 16.1 million in 2001 to 20.5 million in 2021.
So under the reference scenario, the difference in participation would be almost negligible. The labour force growth rate from 2023 to 2041 (+1.17%) would only be slightly lower than what was observed over the last two decades (+1.21%).
The overall labour force participation rate has followed a downward trend since the early 2000s, and this trend will likely continue until 2030, that is, until the last of the baby boomers, born in 1965, reach the age of 65. According to the reference scenario, the labour force participation rate would then stabilise and reach 64.6% in 2041, a level comparable with that seen in 2023 (65.2%).
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Start Trading TodayOther considerations for an aging workforce
Since the early 2000s, the proportion of people aged 55 years and older in the labour force has doubled, from 10.9% in 2001 to 22.4% in 2021. One key factor in this increase is the rise in the participation rate of people aged 55 years and older, particularly among women, over the last two decades.
The study predicts that the proportion of those aged 55 and up in the labour force should stabilize in the coming years, adding that this stabilization has actually already begun.
Under the reference scenario, the proportion of people aged 55 years and older in the labour force would remain below 22% until 2036 and then would reach 23.1% in 2041.
“Moreover, there was little difference when the number of permanent immigrants admitted annually was modified,” the study says. “This indicates that immigration would not bring down the age of the Canadian labour force significantly, because immigrants join the Canadian labour force at a higher age than people born in Canada.”
While the study shows an overall increase in the labour force, the same can’t be said for every province or territory.
According to the reference scenario, the labour force is expected to decline from 2023 to 2041 in most Atlantic provinces, namely Newfoundland and Labrador (-20.2%), New Brunswick (-7.9%) and Nova Scotia (-5.5%).
Also, according to the reference scenario, the overall labour force participation rate would decline in all provinces and territories in Canada, except in Saskatchewan, where the projected rate in 2041 is identical to 2023. For the Atlantic provinces, the declines would be greatest, especially in Newfoundland and Labrador (-5.0 percentage points), New Brunswick (-3.1 points) and Nova Scotia (-2.9 points).
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