The Canadian labour force is a crucial determinant of the country’s economic growth, influencing gross domestic product (GDP), labour productivity, and the standard of living. With the baby boomer generation approaching retirement, significant demographic shifts are anticipated. A recent study by Statistics Canada, utilizing the Demosim microsimulation model, projects the size and composition of the labour force up to 2041 under various scenarios. This analysis provides insights into how different immigration levels and labour force participation rates could shape Canada’s workforce in the coming decades.
The study draws on 2016 Census data, calibrated to 2021 Census data, and incorporates targets from the 2024–2026 Immigration Levels Plan set by Immigration, Refugees and Citizenship Canada (IRCC). It also considers recent demographic changes, including the impact of the COVID-19 pandemic and the surge in permanent and temporary immigrants in 2022 and 2023.
The reference scenario, assuming an annual admission of 500,000 permanent immigrants, projects a rise in the number of labour force participants from 21.7 million in 2023 to 26.8 million by 2041, with an average annual growth rate of 1.17%. Even a reduced intake of 250,000 immigrants per year would ensure continued growth of the labour force, albeit at a slower pace. Conversely, higher immigration levels, up to 750,000 annually, would significantly boost the labour force to 29.5 million by 2041.
The overall labour force participation rate has declined slightly since the early 2000s and is expected to stabilize around 65% by 2041 as the last of the baby boomers retire. The study suggests that increasing participation rates, particularly among older workers, could have a substantial impact on the labour force’s size and composition. Retaining workers aged 55 and older in the labour market is highlighted as a crucial factor for sustaining labour force growth.
Canada’s labour force has aged over recent decades, and this trend is expected to stabilize as the baby boomer generation exits the workforce. The reference scenario projects that the proportion of workers aged 55 and older will remain below 22% until 2036, rising slightly to 23.1% by 2041. Alternative scenarios indicate that significant increases in older workers’ participation rates could elevate this proportion to nearly 29% by 2041.
Immigration plays a pivotal role in shaping the size and ethnocultural composition of the labour force. Higher immigration levels directly influence the labour force’s growth, while also transforming its demographic makeup. The proportion of foreign-born individuals in the labour force has been rising and is projected to continue increasing. By 2041, immigrants are expected to constitute a significant portion of the labour force, underscoring the importance of immigration policies in addressing labour market needs.
The study highlights the challenges of maintaining a balance between labour force entries and exits. The ratio of potential labour force entrants (aged 15 to 29) to exits (aged 55 and older) has been declining, and this trend is expected to continue. Immigration, while crucial, may not suffice to offset this demographic imbalance. A significant rise in fertility rates would be necessary to revert to higher cohort replacement ratios seen in the past.
Sure! Here’s the table with numbers in thousands and with zeros:
| Region | Labour Force 2023 | Labour Force 2041 |
|---|---|---|
| Canada | 21,732,000 | 26,799,000 |
| Newfoundland and Labrador | 258,000 | 206,000 |
| Prince Edward Island | 92,000 | 95,000 |
| Nova Scotia | 531,000 | 502,000 |
| New Brunswick | 407,000 | 375,000 |
| Quebec | 4,749,000 | 5,287,000 |
| Ontario | 8,584,000 | 10,986,000 |
| Manitoba | 762,000 | 935,000 |
| Saskatchewan | 632,000 | 778,000 |
| Alberta | 2,605,000 | 3,728,000 |
| British Columbia | 3,039,000 | 3,823,000 |
| Territories | 72,000 | 85,000 |
As the country navigates the demographic transition with the retirement of baby boomers, strategic policies aimed at boosting immigration and retaining older workers will be essential.