RESEARCH BULLETIN The Implications of Slowing Growth in Canada's Labour Force
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FRASER
RESEARCH BULLETIN April 2021
The Implications of Slowing Growth in
Canada’s Labour Force
by Philip Cross
Summary
Most projections show that the growth of nomic growth in the long run. Canada can no
Canada’s labour force will continue to slow for longer rely on labour force growth to offset
years, with growth dependent on immigration its poor investment and productivity record of
as our population ages. recent years. A slowdown in economic growth
would aggravate the difficulty of lowering gov-
However, the pandemic has reinforced the ernment deficits, which have soared during the
fact that projections about the future are inher- pandemic.
ently uncertain. Already, immigration fell sharply
in 2020. The pandemic’s effect on the long-term
Even before the pandemic, young people
course of labour force participation of all work- faced increasing difficulties getting established
ers and the human capital formation of youths in the labour market and in their adult lives.
are unknown but likely to be negative. Employment rates have fallen, partly as a re-
sult of higher minimum wages and partly from
Slower labour force growth underscores the declines in the labour force participation rate.
importance of adopting measures that boost This is the opposite of what Canada needs to
investment and productivity to sustain eco- offset the accelerating aging of our population.
fraserinstitute.org FRASER RESEARCH BULLETIN 1
The Implications of Slowing Growth in Canada’s Labour Force
Introduction and labour shortages drew people into the la-
Labour is a key input into economic growth. bour force, including an historic reversal of
This is especially true for Canada which has re- the long-term decline in the participation of
lied on rising labour inputs to partly compen- people over 55 years old. However, this surge
sate for its abysmal productivity performance in the labour force was short-lived despite re-
in the past decade. So it is a concern that Can- cord immigration, as the Boomers began to re-
ada’s labour force growth is projected to slow tire in large numbers especially after economic
in coming decades as its population ages, al- growth slowed significantly in the wake of the
though it will still increase in absolute terms. great recession of 2008-2009. Specifically, an-
Moreover, these projections were made before nual labour force growth slowed to 1.3 percent
the pandemic, which is already slowing immi- between 2006 and 2016 as retirements began to
gration and raising mortality, possibly further increase markedly.
reducing the size of the labour force. This paper begins with various Statistics Cana-
It is certain that the labour force of the future da projections about labour force growth over
will be quite different from the labour force of the next 15 years, including a discussion of why
the past due to immigration and aging. Immi- all such forecasts should be viewed with some
grants will account for all of Canada’s future caution given their past errors and the added
population increase, and immigrants have his- uncertainty that the pandemic has created. It
torically chosen to settle in only a few large then examines what a possible slowdown in la-
cities. There are several implications from bour force growth could mean for the economy.
Canada’s aging population. While many will re-
tire, others will stay active, but only on their Projected labour force growth
own terms, including flexible hours and more
Statistics Canada has made projections of Can-
part-time work and self-employment. This will
ada’s labour force based on five scenarios using
make finding and keeping workers challeng-
its “Demosim model” (Martel, 2019). The refer-
ing for large employers, especially in the union-
ence (or base) case simply assumes labour force
dominated public sector. The greater problem
growth continues at a steady 0.7 percent as
for our society is therefore more likely to be
fertility is a constant 1.67 children per woman,
chronic labour shortages than mass unemploy-
immigration is steady at 8.3 per 1000 Canadi-
ment caused by automation and technology.
ans, and the participation rate of older work-
Slower labour force growth continues a de- ers continues to increase (figure 1). The high-
cades-long trend. Canada’s labour force growth scenario assumes the fertility rate rises
reached a peak growth rate of 3.8 percent in to 1.88 and annual immigration gradually in-
the early 1970s when the Boomer generation creases to about 1 percent of Canada’s popula-
was arriving in the labour market and wom- tion in 2022, after which immigration stabilizes
en were entering the labour force in record and labour force growth increases slightly from
numbers. Once the impact of the Boomers ar- its current pace to about 0.8 percent a year.
rival passed, labour force growth slipped be- The low-growth projection incorporates a fer-
low 1 percent by the early 1980s. It rebounded tility rate falling to 1.53 and an immigration rate
to a peak rate of growth of 1.7 percent between of 0.5 percent starting in 2022, which results in
1996 and 2006, when a booming economy labour force growth dwindling to zero by 2026.
fraserinstitute.org FRASER RESEARCH BULLETIN 2The Implications of Slowing Growth in Canada’s Labour Force
Figure 1: Observed (1946 to 2017) and Projected (2018 to 2036) Number of Persons in
the Labour Force According to Five Scenarios, Canada
30 Observed
Reference
25
Low growth
High growth
20
Constant participation rates
Millions
15 Slow growth after 50 years
10
5
0
Source: Statistics Canada, Labour Force Survey, 1946 to 2017; Demosim microsimulation model 2017 (2036).
Two other scenarios involve future labour force Immigrants are the dominant force behind
participation: in one, the participation rates are the future growth of Canada’s labour force. All
frozen at 2017 levels, while another allows the the small gains in the low-growth scenario are
participation rate for older workers to contin- driven by higher immigration; without it, the
ue to increase. Neither of these two scenarios labour force would contract to below 19 million
involving participation rates produce results people by 2036 (Martel, 2019: 4). Immigrants
that differ significantly from the reference case made up 26 percent of Canada’s labour force in
(Martel, 2019: 4). 2016; in Statistics Canada’s base case scenario,
this rises to 34 percent in 2036, and 37 percent
All the projections except the high growth sce-
in the high growth scenario where immigration
nario show some slowdown in labour force
is higher (Martel, 2019: 5). Of course, immigrant
growth over the coming decades (see figure 2
flows are concentrated in Toronto and Montre-
below), although the labour force continues to
al. If that continues to be the case, labour force
grow in absolute numbers in all the scenarios.
shortages will become more severe in smaller
This slowdown continues in every scenario out
cities and non-metropolitan areas.
to 2036. The high growth projection sustains
labour force growth at about 1.0 percent a year
on average, while the slowest growth scenario Immigration rises, participation rates fall
envisages growth slowing steadily to just 0.2 Immigration dominates the future growth of
percent on average between 2026 and 2036. the labour force because recent immigrants
fraserinstitute.org FRASER RESEARCH BULLETIN 3The Implications of Slowing Growth in Canada’s Labour Force
Figure 2: Observed (1946 to 2016) and Projected (2011 to 2036) Average Annual
Changes in the Labour Force According to Five Scenarios, Canada
4.0
Observed
3.5 Reference
Low growth
3.0
High growth
2.5 Constant participation rates
Percent
2.0 Slow growth after 50 years
1.5
1.0
0.5
0.0
1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026 2031
to to to to to to to to to to to to to to to to to to
1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026 2031 2036
Source: Statistics Canada, Labour Force Survey, 1946 to 2016; Demosim microsimulation model 2017 (2036).
(those in Canada for 10 years or less) have a tion rate in all the scenarios, as it outweighs
higher participation rate in the labour force the projected pick-up in immigration. Already,
than other Canadians, partly because they are Canada’s participation rate has fallen from 68
younger.1 The overall participation rate—de- percent in 2008 to 65.7 percent in 2019 (and
fined as the share of the population 15 years then to 64.1 percent in 2020). The overall par-
and older that is employed or looking for a job- ticipation rate has trended down despite steady
-falls in every scenario thru 2036 as the popu- increases in the labour force participation of
lation ages and older workers retire2 from the older workers, which has continued since its
labour force (figure 3). The aging of the popu- beginning in 1995. However, while cohorts of
lation accelerates this decline in the participa- older people are more likely to continue work-
ing than people of the same age in previous
1 decades, a substantial number still retire and
The participation rate in 2020 for landed immi-
the labour force participation for older work-
grants who were in this country for 5 or less years
was 71.4 percent, and 73.5 percent for those arriving ers remains lower than for middle-aged people.
5 to 10 years earlier, compared with 64.3 percent for Hence, a rising labour force participation rate
people born in Canada (Statistics Canada, Table 14- for older Canadians will not prevent a decrease
10-0083-01). in the overall labour force unless the participa-
2
Retire comes from the French word for withdraw- tion rate of older workers is the same or higher
ing, in the sense of heading into isolation (Farrell, than for younger workers, a very unlikely devel-
2014, 36). opment.
fraserinstitute.org FRASER RESEARCH BULLETIN 4The Implications of Slowing Growth in Canada’s Labour Force
Figure 3: Observed (1981 to 2017) and Projected (2018 to 2036) Overall Participation
Rates According to Five Scenarios, Canada
69
68
67
66
65
Percent
64
Observed
63
Reference
62
Low growth
61
High growth
60
Constant participation rates
59
Slow growth after 50 years
58
1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026 2031 2036
Source: Statistics Canada, Labour Force Survey, 1946 to 2017; Demosim microsimulation model 2017 (2036).
Implications of an aging labour force more flexible hours” (Taylor, 2013: 13). Older
The projection of slower labour force growth workers show a preference for part-time posi-
does not capture the full extent of the impact tions, which account for 22.7 percent of their
of an aging population. Just before the pan- jobs (twice the rate of people 25 to 54 years)
demic struck, 21.6 percent of the labour force (Statistics Canada, Table 14-10-0287-01). They
was 55 years or older; by 2036 Statistics Canada also show a higher propensity for working for
projects the share of older workers (55 years themselves or in small firms rather than in the
and older) could rise to 25 percent. The grow- anonymity of large firms. A management book
ing share of older workers is important for sev- summarized how the attitude of older workers
eral reasons beyond the fact they are the most has changed in recent years: “Once-dependable
likely to retire from the labour force. workers over age 50 do not necessarily keep
on toiling as full-time, 9-to-5 employees; many
Older workers who stay in the labour force are dive into the labour force as temporaries, part-
more likely to remain only on their own terms: timers, consultants on special assignment or
one summary report found that “Surveys dem- knowledge workers” (Edersheim, 2007: 22).
onstrate a willingness amongst older workers
to continue working under certain conditions, The different work preferences of the current
namely if they can reduce their hours or work generation of older people implies that large
fraserinstitute.org FRASER RESEARCH BULLETIN 5The Implications of Slowing Growth in Canada’s Labour Force
firms are likely to face a much greater drop Spokus, 2013: 203). People are still experiment-
in the pool of potential workers than smaller ing with the mix of sticking with full-time work,
firms. As a result, large firms may have to be- starting a new business, working part-time,
come more flexible in offering part-time work, joining a non-profit, and doing contract work
extended time off for travel or visits to fam- (Farrell, 2014: 18).
ily, and more autonomy to keep or attract old-
The downsides of an aging population are well-
er workers, something that may be difficult
documented, focusing on slower labour force
for larger firms. This will be especially difficult
growth. However, some analysts have pointed
for governments, whose workplace is shackled
out that there is also an upside. The aging pop-
by rigid rules and regulations negotiated with
ulation presents an enormous opportunity for
public sector trade unions. Unions have op-
society and for older individuals to seize and
posed retaining a large number of part-time
exploit. In the words of Marc Freedman, “Never
older workers, who are not as interested in the
before have so many people had so much ex-
pursuit of higher wages at their career stage
perience and the time and the capacity to do
(older workers are more oriented to non-wage
something significant with it. That’s the gift of
benefits such as health care and job flexibility)
longevity, the great potential payoff on all the
that preoccupies core union members. What
progress we’ve made expanding lives” (Quoted
is beneficial for society and older workers may
in Farrell, 2014: 9). Like all seismic upheavals,
not be regarded as good for unions and their
the challenges of an aging population create
core, active members.3
opportunities for those able to take advantage
There are many reasons why society should of the new environment.
encourage older workers to stay active in the
labour force. Pension expert Fred Vettese es- The pandemic increases the uncertainty
timates that every additional year of work re-
surrounding labour force projections
duces the retirement income needed by 6
percent (Vettese and Morneau, 2013: 80). A It is quite possible that future labour force
more flexible approach to retirement includes growth will be different from the various sce-
some version of a “gradual” retirement, with a narios sketched out by Statistics Canada. This
phased-in transition from work to retirement is clearly demonstrated by how Statistics Can-
that facilitates the adjustment for older work- ada’s own projections of future labour force
ers and allows the retention and transfer of growth have changed over time. In 2007, for ex-
their skills and knowledge. This is also called ample, it projected that Canada’s labour force
“bridge” employment that offers part-time or in 2031 would number between 19.4 million and
flexible hours to older workers and the oppor- 21.8 million, depending on the scenario (Mar-
tunity to mentor or train others (Sterns and tel, 2007). In 2011 Statistics Canada revised
this projected range to between 20.5 million
and 22.5 million, an upward revision of 1.1 mil-
3
A very small group can dominate a union because lion and 0.7 million from just four years earlier
of low voting rates. For example, in its 1992 election
(Martel et. al., 2011). In 2019 Statistics Canada
only 5,473 of the 25,467 eligible members of the Pro-
fessional Institute of the Public Service of Canada revised the projected labour force for 2031 to
voted, meaning the outcome was controlled by 2,737 between 20.9 million and 22.0 million. This rep-
people (Russell, 2020: 91). resents 1.5 million more people in the labour
fraserinstitute.org FRASER RESEARCH BULLETIN 6The Implications of Slowing Growth in Canada’s Labour Force
force in the low growth scenario and 0.2 million economists did not anticipate the post-war
more in the high growth scenario from its orig- surge of women into the labour force and the
inal projection in 2007 (and an increase of 0.4 increase in older workers staying in the labour
million from its 2011 low growth scenario while force after 1995.
revising down its high growth projection by 0.5
The 2020 pandemic demonstrated vividly how
million).
difficult it is to forecast into the future even
Most of the revisions to the projections of the one year, never mind decades. For example,
labour force have reflected different assump- population growth in Canada slowed sharply
tions for the labour force participation rate, to 0.9 percent during 2020 from 1.5 percent
which is more difficult to forecast than popu- in 2019,4 mostly because immigration slowed
lation. Given the revealed range of uncertainty markedly as Canada and most countries closed
around these projections of future labour force their borders to stop the spread of the vi-
growth, one cannot rule out that Canada’s ac- rus. Immigration to Canada fell from 341,175
tual labour force in the 2030s could be sub- in 2019 to 184,370 in 2020, especially after the
stantially higher or lower than official forecasts. first quarter. From a quarterly peak of 103,719
just before the pandemic, immigration at the
An argument can be made that Statistics Cana- worst of the pandemic slowed to just 34,271 in
da should not be making projections of the la- the second quarter of 2020 and barely recov-
bour force given the inevitable difficulty of ac- ered to 40,069 in the third quarter and 40,868
counting for unforeseen events. Statcan has in the fourth (Statistics Canada, Table 17-10-
always had a policy of not forecasting any other 0040-01).5 It is unknown how long borders will
variables, so demography is a glaring excep- remain closed and whether immigration levels
tion. Demographers at times have had difficulty in the future will be boosted to make up for the
forecasting sudden shifts in population; in 1938, shortfall in 2020.
for example, President Roosevelt convened
The pandemic also injects considerable un-
leading population experts, who unanimously
certainty into future projections of births and
predicted that the US population would peak at
deaths. In particular, the pandemic and the
around 140 million in the 1940s and then slowly
curtailment of even routine health care for
decline. No one saw the Baby Boom explosion
much of Canada’s population already resulted
after World War II nor the ensuing Baby Bust.
in a 5 percent increase in the number of deaths
Management guru Peter Drucker said that er-
in 2020 compared with what would have been
roneous population forecasts are common be-
expected (Statistics Canada, 2021, February 8).
cause decisionmakers “cling to the assump-
The morbidity rate could continue to rise for
tion that demographics do not change—or don’t
years as a result of the cancellation of surger-
change fast” (Drucker, 1985: 92-93). However,
ies and fewer emergency room visits for events
forecasts 15 years ahead are likely to be reason-
ably accurate barring a major shock.
4
The population is for people 15 years and older
Population is challenging enough to forecast, from the labour force survey (Statistics Canada,
but labour force participation rates are even Table 14-10-0287-01). Almost all (92 percent) of the
increase was for people 55 years and older.
more uncertain since they reflect a wide range
of social and economic variables. For example, 5
The annual total is from Younglai, 2021, Feb. 12).
fraserinstitute.org FRASER RESEARCH BULLETIN 7The Implications of Slowing Growth in Canada’s Labour Force
such as cardiac arrest.6 The birth rate also ducing industries rose 4.2 percent (by compari-
could be affected by the pandemic. Already the son, employment of people between 15 and 54
various measures to lock down the population years fell by 5.1 percent in services and 3.9 per-
and impose social distancing has resulted in cent in goods) (Statistics Canada, Table 14-10-
fewer marriages. In the longer-term, the sharp 0022-01).
increase in unemployment among young peo-
The long-term impact on the human capital of
ple could delay family formation, as happened
young people is especially unclear. In the very
in previous downturns.
short term, the sharp drop in their employ-
Compounding the unknown impact of the pan- ment has led many to withdraw from the labour
demic on the three components of population force, often choosing to remain in school un-
growth—immigration, births, and deaths—is a til job opportunities improve. The participation
possible change in labour force participation in rate of youths 15 to 24 years fell from 64.7 per-
the future due to our collective experience with cent before the pandemic began to 62.0 per-
the pandemic. It is not clear whether the pan- cent in January 2021, the largest decline of any
demic and the severe recession and disruption major age group.7 While precise data on uni-
will increase or decrease labour force partici- versity enrollment are not yet available, labour
pation. It is possible the growing potential for force survey data show the student popula-
working from home will convince some people tion in Canada grew by 2.9 percent between the
to remain in the labour force longer, especially last four months of 2019 and the same period
older workers. On the other hand, some people in 2020 (Statistics Canada, Table 14-10-0021-
may want to make up for time denied with their 01). More schooling could lead to higher levels
families and friends, boosting their desire to re- of human capital among this cohort of young
tire and visit family or travel. In the very short people, although the quality of education fell
run, the pandemic and recession have acceler- during the pandemic, an erosion that was quite
ated the exit of older people from the labour predictable from prior experience with on-line
force, as often occurs during downturns. The courses that found user “engagement” falls dra-
exit was particularly pronounced in service in- matically and few students persist to the end
dustries where there is contact with the public; of courses, especially among less motivated
there were 4.9 percent fewer older workers in and undereducated students (Ford, 2015: 134).
services in January 2021 compared with a year The pandemic complicated the always difficult
earlier, while their employment in goods-pro- transition from school to the workplace and in-
deed became harder than it usually does during
recessions: for example, it inhibited recruiting
6
For example, cancer diagnoses have fallen 16 per- trips to university campuses, personal inter-
cent during the pandemic, and there is an increase views, mentoring, and immersing new employ-
in late-stage cancers in newly diagnosed patients ees in the culture of an office network. At the
(see Payne, 2021, February 4). Former Quebec Pre- same time, the inflow of students from abroad
mier Philippe Couillard and two fellow doctors ex-
pressed similar concerns about the backlog caused
7
by a 20 percent decline in cancer surgeries, while 47 The participation rates of people aged 25 to 54
percent of patients reported having a cancer-care years old and those between 55 and 64 years actual-
appointment postponed or disrupted by the pan- ly rose over the course of 2020 (Statistics Canada,
demic (Bell, Couillard, and Lawrie, 2021, February 4). Table 14-10-0287-01).
fraserinstitute.org FRASER RESEARCH BULLETIN 8The Implications of Slowing Growth in Canada’s Labour Force
has slowed (most spectacularly, the drop in for- in Canada has been flat over the past two de-
eign students who pay substantially higher fees cades (Tang and Wang, 2020: 8).9
than Canadians led Laurentian University to file
However, a slowdown in labour force growth
for bankruptcy) (Jeffords and McKenzie-Sutter,
is not inevitable. It is worth recalling the pick-
2021, February 1). This also could dampen fu-
up in labour force growth Canada-wide be-
ture labour force growth, since many foreign
tween 1996 and 2006. At that time, severe la-
students eventually stay in Canada to pursue
bour shortages in some parts of the country
their careers.
led employers—without government interven-
tion—to offer higher wages and recruit some
Implications if slower labour force groups previously overlooked (such as the dis-
growth materializes abled and older workers), resulting in higher la-
A slowdown in labour force growth has pro- bour force growth and a more inclusive, diverse
found implications for Canada’s long-term eco- workplace. A similar pattern emerged in west-
nomic growth. Labour and capital, and the ef- ern Canada at the peak of the oil boom in 2008,
ficiency and ingenuity with which they are when employers adopted a number of creative
combined, are the drivers of economic growth. means to entice workers to join the labour force,
It is well known that Canada’s labour force has delay retirement, and work longer hours to sup-
been a prime source of the country’s economic ply the required labour (Cross, 2014: 5). If future
growth in recent years. Canada has the high- labour force growth does not meet require-
est labour force participation in the G7 at 65.7 ments, there are reasons to believe employers
percent in 2019, compared with 63.5 percent in will be just as creative in finding the labour input
the UK, 63.1 percent in the US, 62.0 percent in they need.
Japan, 61.9 percent in Germany, 55.3 percent in
Nor does a slowdown in population or labour
France and 49.9 percent in Italy (OECD, 2020).
force growth automatically result in labour
Slower labour input growth means that avoid- shortages. Many European countries, nota-
ing a further deceleration of economic growth— bly France and Italy, have seen a rapid aging of
on top of the one we already have experienced their population in recent years, yet unemploy-
over the past decade—necessitates that we in- ment remains high and there are few symp-
crease capital inputs or combine labour and toms of a shortage of labour (Cross, 2014: 1).
capital more productively. The recent trend is Some countries such as Japan, Russia, and Po-
not encouraging. Business investment in Can- land have seen their population shrink outright
ada has declined by 31.3 percent since 2014, without creating labour shortages. The same
the worst performance in the major industrial holds true in Canada for Quebec and the Mari-
nations.8 Nor is this weakness due solely to a time provinces, where the aging of the popu-
slump in the oil and gas industry, as a majority lation is more advanced than in Ontario and
of industries have cut back on their investment western Canada. However, it is worrisome that
in Canada. Meanwhile, total factor productivity all these countries and regions with rapidly ag-
ing populations also have seen a slowdown in
8 9
Investment declined by 20.6 percent before the The authors note “no strong empirical evidence of
pandemic (Statistics Canada Table 36-10-0104-01). what caused the slowdown.”
fraserinstitute.org FRASER RESEARCH BULLETIN 9The Implications of Slowing Growth in Canada’s Labour Force
economic growth and trouble restraining gov- 3D printing, and driverless vehicles. These new
ernment budget deficits. technologies are disrupting almost every in-
dustry around the world. And the breadth and
Irrespective of slower labour force growth, an
depth of these changes herald the transforma-
aging population puts significant upward pres-
tion of entire systems of production, manage-
sure on government deficits, already swollen
ment, and governance” (Meredith, 2020: 124).
by the pandemic. Older people pay lower tax-
The pandemic clearly accelerated the adoption
es both because their productivity and income
of some technologies, especially those related
usually is lower and because of various tax
to communications and on-line banking.
breaks offered to them, notably the $2,000 de-
duction for people receiving payments from a Some may argue that technology is a two-
pension plan. Further upward pressure on gov- edged sword, and that automation and artificial
ernment finances comes from higher spending intelligence will be substituted for labour and
to support the pensions and health care needs create mass unemployment. Media accounts
of older Canadians. make mass unemployment seem inevitable, but
experts are evenly divided on whether AI and
Slower growth is not inevitable robotics will create or displace more jobs.10
This is a possibility for some occupations but
past predictions of how humans could be re-
Just as slower labour force growth is not inevi-
placed by technology have been overly con-
table, so too can Canada influence the other
fident. For example, early in the 2020s it was
determinants of growth, which are the stock
widely believed that truck driving jobs, the
of capital, and productivity, including techno-
largest employer of men, would be replaced by
logical change. A number of policies could help
driverless vehicles, but both technological dif-
raise investment, including lower effective tax
ficulties and legal issues have blocked their dif-
rates, easing regulatory restrictions, promoting
fusion (Ford, 2015: xiii). Similarly, teaching was
internal trade, encouraging more competition
thought to be imperiled by massive open on-
and business formation, and allowing resource
line courses (MOOCs), but on-line teaching has
developments (including pipelines) to proceed.
proved to be a poor substitute for in-class in-
It is even easier to envisage how productivity struction (Ford, 2015: 132).
growth could improve. A wide range of exist-
While routine jobs are being automated, peo-
ing technologies have the potential to become
ple are shifting to other areas which are hard-
the General Purpose Technologies (GPTs) that
er if not impossible to replace with machines.
drove past productivity booms, such as elec-
These occupations emphasize skills that only
tricity and automobiles in the early twentieth
humans can provide, which include relation-
century. These potential GPTs “blur the lines
ship building, communications, creativity, and
between the physical, digital, and biological
cultural sensitivity. These so-called soft skills
spheres, collectively referred to as cyber-phys-
are replacing the cognitive skills traditionally
ical systems. Its progeny has included entirely
new areas of human enterprise, such as ro-
botics, artificial intelligence, nanotechnology, 10
Optimists slightly outnumbered pessimists by 52
quantum computing, biotechnology, the Inter- to 48 percent, according to a Pew survey of 1,986
net of Things, advanced wireless technologies, experts (reported in Davenport and Kirby, 2016: 226).
fraserinstitute.org FRASER RESEARCH BULLETIN 10The Implications of Slowing Growth in Canada’s Labour Force
emphasized by our education systems. Studies tunities for youth can be attributed to the
have found that since 2000 both jobs and wag- recent sharp minimum wage hikes in some
es have fallen for occupations that require high provinces, notably Ontario and Alberta. For
levels of cognitive ability but low social skill re- example, youth employment in Alberta and
quirements, while they have risen for social- Ontario was unchanged between December
skill-intensive jobs (Deming, 2017: 8). 2017 and December 2019, compared with an
increase of 9.7 percent in the rest of Canada.
The potential of new technologies reinforces
More broadly, employment in the private sec-
the importance of mentoring and grooming
tor slowed as investment declined and new
young people to take the place of older work-
start-ups lagged.
ers. The outlook for today’s youth is as chal-
lenging as at any time in the past. It is positive Other trends are restraining the growth of la-
that they have higher levels of education. How- bour productivity. The geographic mobility of
ever, there is a near consensus that the quality Canada’s population has been slowly declin-
of education has declined during the pandemic ing for decades, further dampened after 2015
as virtual classrooms have proven to be a poor by the slowdown in the oil sands, which had
substitute for the in-person mentoring only the served as a beacon for many blue-collar work-
physical attendance by teachers and students ers and immigrants struggling for a toe-hold
can provide. Social distancing, virtual learning, in Canada’s labour market. There has also been
curfews on nightlife, and prolonged isolation a decline in the willingness of Canadian work-
reduce the acquisition of social skills and emo- ers to leave their current jobs for other jobs
tional capital which is increasingly important in even without moving from their current lo-
the workplace. cation. The share of workers who left one job
for another fell from an average of 4.2 percent
Other barriers exist for today’s youth. Even
from 2000-2009 to 3.7 percent from 2010 to
before the pandemic young people were find-
2015 (Cross, 2019: 8). As a result, job tenure in
ing it increasingly difficult to make the tran-
Canada is at a record high. The drop in job leav-
sition into the labour force, the exact oppo-
ers also helped depress wages, as people who
site of what our aging society needs. Even
change jobs earn substantially more than peo-
as the unemployment rate for older workers
ple who stay in the same job.
hit record lows, unemployment among youth
remained stubbornly above 10 percent af-
ter 2014, and increasing numbers of young Conclusion
people left the labour force. In fact, for all A slowdown in the growth of Canada’s labour
the discussion of an aging population and a force as its population ages risks being aggra-
shrinking labour force, young people were vated by the ongoing global pandemic. While
the only age group whose participation rate the impact of technology on future labour de-
fell over the past decade, notably for teen- mand may not be as negative as many fear, it is
agers.11 At least some of the bleak job oppor-
percent to 49.7 percent. Participation for people
11
The participation rate for youths fell from 64.9 over 55 years rose from 35.8 percent to 37.3 percent
percent in December 2010 to 64.8 percent just be- over the same period (Statistics Canada, Table 14-
fore the pandemic, with teenagers down from 52.3 10-0287-01).
fraserinstitute.org FRASER RESEARCH BULLETIN 11The Implications of Slowing Growth in Canada’s Labour Force
more predictable that labour supply growth will Farrell, Chris (2014). Unretirement: How Baby
continue its recent slowdown. The experience Boomers Are Changing the Way We Think
of other countries and of provinces within Can- About Work, Community, and the Good Life.
ada with an aging population show that slower Bloomsbury Press.
population growth increases the difficulty of Ford, Martin (2015). Rise of the Robots: Technology
sustaining economic growth and containing and the Threat of a Jobless Future. Basic Books.
government deficits. This makes it all the more
important for Canada to adopt policies as soon Jeffords, Shawn, and Holly McKenzie-Sutter
as possible that stimulate business investment (2021, February 1). Laurentian University Ap-
and boost productivity. Canada’s large firms plies for Court Protection Amid Financial
Challenges. National Post.
and governments will have to be more creative
and flexible in retaining older workers as long Martel, Laurent (2007). Labour Force Projections
as possible while raising the mobility that plac- for Canada, 2006-2031. Canadian Economic
es younger workers in the best position to suc- Observer. Statistics Canada Catalogue no 11-
ceed in the future. 010-X (June). Statistics Canada.
Martel, Laurent (2019). The Labour Force in
References Canada and Its Regions: Projections to 2036.
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Bell, Bob, Philippe Couillard, and Robert Lawrie da Catalogue no. 75-006-X (March 20). Statis-
(2021, February 4). Clearing the Virus Backlog tics Canada.
Isn’t Enough. We Must Build a Better Health
Care System. Globe and Mail. Martel, Laurent, Eric Caron Malenfant, Jean-
Dominique Morecy, Andre Level, Alain Belanger
Cross, Philip (2014). Do Labour Shortages Exist and Nicolas Bastien (2011). Projected Trends to
in Canada? Reconciling the Views of Employers 2031 for the Canadian Labour Force. Canadian
and Economists. Fraser Institute. Economic Observer. Statistics Canada Cata-
logue no 11-010-X (August). Statistics Canada.
Cross, Philip (2019). Moving Around to Get
Ahead. Macdonald-Laurier Institute. Meredith, Patricia (2020). Better Boardrooms:
Repairing Corporate Governance for the 21st
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Century. University of Toronto Press.
Only Humans Need Apply: Winners and Losers
in the Age of Smart Machines. HarperCollins. Organisation for Economic Co-operation and
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Danger. Ottawa Citizen.
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fraserinstitute.org FRASER RESEARCH BULLETIN 12The Implications of Slowing Growth in Canada’s Labour Force
Statistics Canada. Table 14-10-0021-01: Unem- Philip Cross worked for 36 years at
ployment Rates, Participation Rates and Em- Statistics Canada, the last few as its
ployment Rates by Type of Student during Chief Economic Analyst. He wrote
School Months, Monthly, Unadjusted for Sea- Statistics Canada’s monthly assess-
sonality. Statistics Canada. ment of the economy for years, as
well as many feature articles for the
Statistics Canada. Table 14-10-0022-01: Labour Canadian Economic Observer. After
Force Characteristics by Industry, Monthly, leaving Statistics Canada, he has
worked as a contract researcher for a
Unadjusted for Seasonality. Statistics Canada.
variety of organizations. He has been
widely quoted over the years, and
Statistics Canada. Table 14-10-0083-01: Labour
now writes a bi-weekly column for
Force Characteristics by Immigrant Status,
the National Post and other papers.
Annual. Statistics Canada.
Statistics Canada. Table 14-10-0287-01: Labour
Force Characteristics, Monthly, Seasonally
Adjusted. Statistics Canada.
Statistics Canada. Table 17-10-0040-01: Esti-
mates of the Components of International Mi-
gration, Quarterly. Statistics Canada. Acknowledgments
Statistics Canada. Table 36-10-0104-01: GDP, The author thanks the external reviewers
Expenditure-based, Canada. Statistics Canada. for their helpful comments and suggestions.
Any remaining errors or omissions are the
Sterns, Harvey L., and Diane M. Spokus (2013). sole responsibility of the author. As the re-
Lifelong Learning and the World of Work. In searcher has worked independently, the
Philip Taylor (ed.), Older Workers in an Ageing
views and conclusions expressed in this pa-
Society (Edward Elgar).
per do not necessarily reflect those of the
Tang, Jianmin, and Weimin Wang (2020). Tech- Board of Directors of the Fraser Institute,
nological Frontiers and Post-2000 Produc- the staff, or supporters.
tivity Growth in Canada. Statistics Canada
Catalogue no 11F0019M-No. 438 (January 17).
Statistics Canada. Copyright © 2021 by the Fraser Institute. All rights
reserved. Without written permission, only brief pas-
Taylor, Philip (2013). Introduction: Older Work- sages may be quoted in critical articles and reviews.
ers in an Ageing Society. In Philip Taylor (ed.),
Older Workers in an Ageing Society (Edward ISSN 2291-8620
Elgar). Media queries: For media enquiries, please contact
our communications department via e-mail: commu-
Vettese, Fred, and Bill Morneau (2013). The Real nications@fraserinstitute.org; telephone: 604.714.4582.
Retirement. John Wiley & Sons.
Support the Institute: call 1.800.665.3558, ext. 574
or e-mail: development@fraserinstitute.org
Younglai, Rachelle (2021, February 12). Immigra-
tion to Canada Dropped 46% in 2020. Globe Visit our website: www.fraserinstitute.org
and Mail.
fraserinstitute.org FRASER RESEARCH BULLETIN 13You can also read
