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Aging workforce starting to impact the Canadian labour market: RBC study

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A new Royal Bank analysis suggests that Canada's labour market is already starting to feel the impact of an aging work force.

 

A new Royal Bank analysis suggests that Canada's labour market is already starting to feel the impact of an aging work force.

The RBC paper notes that given soft job growth in the past year, and the corresponding decline in the labour participation rate, it is easy, and likely inaccurate, to jump to the conclusion that many Canadians are becoming too discouraged to look for work.

However, economist Nathan Jansen said that the most likely explanation is just that the baby boomer generation is starting to retire.

The evidence for such a conclusion is there has been an increase in the number of Canadians, who are classified as not in the work force.

It turns out that 65 year olds and older are responsible for most of the increase in the not-in-the work force category, not because they are discouraged, but because they have retired, said Jansen.

He points out that back in 2007, Statistics Canada predicted that the participation rate would start to fall sharply going forward because of the aging population, with the decline becoming noticeable in 2011.

If the analysis is true, that is good news for policy-makers because it suggests the country’s current unemployment rate of 6.9 per cent reflects accurately what is going on in the labour force, and does not hide a large number of discouraged workers.

But, analysts have also warned that as baby boomers retire it will squeeze government budgets with higher costs for services, such as health care and fewer workers paying taxes.

News from © Canadian Press Enterprises Inc., 2014

by Journal Of Commerce last update:Aug 26, 2014

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