As Canada’s baby boomers continue to retire, the country’s labour force is undergoing significant shifts, according to a new study from Statistics Canada.
The analysis, titled “Canadian labour force: What will happen once baby boomers retire?,” examines the potential impact of various factors on the labour force’s size and composition through 2041, offering insights into the future of work in the country.
It highlights the ongoing effects of the baby boomer generation — those born between 1946 and 1964 — reaching retirement age. Since 2011, when the first wave of baby boomers turned 65, the Canadian labour force participation rate has steadily declined, reaching a 20-year low of 65% in 2023.
Immigration, older workers to pick up slack
Despite this downward pressure, the study projects that Canada’s labour force will continue to grow over the next two decades, driven largely by immigration and increased labour force participation among older workers. Six scenarios were developed for the study, with the “reference scenario” serving as a benchmark by assuming that recent trends in population growth and labour force participation will persist.
One of the key drivers of labour force growth identified in the study is immigration. Record levels of immigration were reported in 2022 and 2023, with Canada welcoming 468,817 immigrants between July 1, 2022, and July 1, 2023. This surge, alongside the increase in non-permanent residents, is expected to accelerate labour force growth in the short term.
The reference scenario anticipates that Canada will admit 500,000 permanent immigrants annually and that non-permanent residents will account for 5% of the total population by 2028. Under this scenario, the labour force is projected to expand from 21.7 million in 2023 to 26.8 million in 2041. For comparison, the labour force grew from 16.1 million in 2001 to 20.5 million in 2021.
However, the rate of labour force growth from 2023 to 2041 is expected to be slightly lower (+1.17%) than what was observed over the past two decades (+1.21%).
Number of workers 55+ doubles
The study also addresses the aging of the labour force, a trend that has been evident since the early 2000s as baby boomers reached retirement age. The proportion of workers aged 55 and older has more than doubled since 2001, largely due to the large number of baby boomers and an increase in the participation rate among older workers, particularly women.
This demographic shift is expected to stabilize once the last cohort of baby boomers reaches 65 in 2030. The reference scenario projects that the proportion of workers aged 55 and older will remain below 22% until 2036, before increasing slightly to 23.1% in 2041.
While immigration plays a crucial role in labour force growth, the study suggests it has little impact on the aging of the workforce. Immigrants tend to enter the labour force at older ages than Canadian-born workers, meaning their arrival does not significantly reduce the average age of the labour force.
Projections vary widely across the country, with the reference scenario showing increases in the national labour force but declines in several Atlantic provinces. Newfoundland and Labrador, New Brunswick, and Nova Scotia are expected to see decreases in their labour forces by 2041. The study also predicts a decline in labour force participation rates across most provinces and territories, with Saskatchewan being an exception, where the rate is projected to remain unchanged from 2023 to 2041.
This study provides a detailed look at the evolving landscape of Canada’s labour force as the country navigates the challenges posed by an aging population and shifting demographic patterns. The findings underscore the importance of immigration and workforce participation among older workers in shaping the future of work in Canada.
