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Aging Workforce Driving Canada’s Labor Shortage


When Dan Gallagher walks around his company, he sees a lot of retirement parties in his future.

Although it’s not something he officially follows, the CEO of Mikisew Group – a Fort McMurray, Alberta-based company that specializes in sands venue services, maintenance, logistics and construction bituminous – knows that he has more employees at the end of their career than just starting.

“I walk around our shop floor and around our field service personnel, and I can clearly see this demographic. It’s getting older,” Gallagher said.

The implications of this make him nervous.

The Mikisew Group is already struggling with a labor shortage, recruiting even as far away as Australia just to keep its heavy equipment fleet moving. And basic demographics suggest that the company’s problem should be getting worse, not better.

“The ratio of apprentices to older workers here has been so low for so long that there just isn’t enough staff to compensate for departures,” says Gallagher.

For years, experts have warned of an impending wave of retirements as baby boomers – those born between 1946 and 1964 and Canada’s largest generation – age and begin to leave the workforce in droves. .

The growth rate of the country’s labor force has been on a downward trend since 2000, but the trend has intensified in recent years. This “grey wave” has been on the horizon for some time, but experts say it is now crashing ashore.

According to Statistics Canada, between 2016 and 2021, more than 1.4 million Canadians entered the ranks of those aged 55 and older.

Last year alone, one in five Canadians of working age was between the ages of 55 and 64, an all-time high in Canadian census history.

“It’s like a truck stopping in your rear view mirror. You see it there, and it’s moving slowly, and then you look away for a while and suddenly it’s completely on your tail,” Mike said. Holden, Chief Business Economist. Alberta Council.

The arrival of the gray wave comes at the same time as companies of all sizes, all industries and all provinces are complaining about labor shortages. In the second quarter of 2022, there were over one million job vacancies in Canada – the highest quarterly number on record.

It is not a coincidence. Although the COVID-19 pandemic has disrupted labor markets, it bears much of the blame for persistent labor shortages.

But Canada’s labor force participation rate is currently only slightly lower than it was before the pandemic. In fact, young and middle-aged Canadians have returned to the labor market at levels close to or well above those seen in 2019, a report from Scotiabank points out.

The same report indicates that the decline in overall labor market participation that exists is entirely due to the fact that Canadians aged 60 and over are leaving the labor market. This means that the real root of the current problem is Canada’s aging population, and it has broad implications for the country’s economy.

“I think the most important thing that gets overlooked is, what are the consequences of these labor issues?” says Patrick Gill, Senior Director of the Canadian Chamber of Commerce’s Trade Data Lab.

He points out that about one in three Canadian businesses (36%) say they are already facing a labor shortage. This figure climbs to around 45% in the manufacturing and construction sectors and 58% in the restaurant and accommodation sector.

“That translates into everyone working longer hours, and that ultimately affects quality of life. That means slower growth, and that’s also a factor in supply chain delays.”

Concerned business groups have offered a number of possible solutions to the looming demographic crisis, from increasing immigration levels to finding ways to keep older Canadians longer in the workforce. (Some observers have even suggested that the government should raise the Old Age Security age, in part to discourage early retirement).

But even a significant increase in immigration won’t be enough to stem the rising tide, says Rafael Gomez, director of the University of Toronto’s Center for Industrial Relations and Human Resources.

The last generation of baby boomers in Canada will turn 65 in 2030, and once this cohort is entirely out of the labor force, the working-age population – those aged 15 to 64 – will represent a smaller proportion of the entire Canadian population.

“It was always going to bite us,” Gomez says. “Demographic trends are not easy to change in the short term. In fact, it is true that for 20 years, we will see a decline (in the working population).”

While governments should use every policy lever at their disposal to address labor shortages, Gomez says, employers must also come to terms with the fact that the challenges they currently face in filling vacancies are not going to go away. vanish.

“It’s your new normal. And even if the economy crashes, it won’t change working conditions,” he says.

“We’re entering an era where we’re going to have a younger workforce – doing more, being asked to do more, being challenged and being challenged,” adds Gomez.

“Labour is going to be very hard to find and employers are going to have to work hard to attract employees.”

This report from The Canadian Press was first published on December 11, 2022.

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