Statistics Canada projects that low fertility and an aging population will result in a sharp decline in the proportion of the population working or actively looking for work. This will be driven by large-scale retirements of baby boomers combined with expected reductions in the number of young people entering the work force.
Researchers at Statistics Canada estimated four labour force scenarios to 2031. In three of the four scenarios, the absolute size of Canada’s labour force increases throughout the next twenty-five years but, in all four scenarios, the overall participation rate drops sharply. (See Figure 2 at right.)
Larger population growth, whether through increased immigration or higher fertility rates (or both), has a negligible effect on the projections.
A rise in the birth rate or higher immigration to Canada has only a minor impact on the overall participation rate in the future and does not stop the downward trend. Population therefore is the driving force of future changes: it is not the solution, at least in the short and medium terms.
These trends mean that there will be a significantly higher ratio of retirees per working person by 2013. This will place great pressure on government pension and social welfare programmes, for more retired elderly will be claiming public pensions and relatively fewer workers will be working to contribute the needed taxes. 
In all the scenarios, the number of workers per retired person aged 65 or older is cut in half between 2005 and 2031, falling from about five today to slightly more than two in 2031 (Figure 3). In 1981, this ratio was more than five workers per retired senior. These findings also suggest that neither a rise in the birth rate, nor increased immigration, nor even the continued rise in participation rates could reverse the downward trend.
A provincial breakdown shows that only Alberta, Ontario, and British Columbia are projected to have larger labour forces in 2031 than they do today. In all four scenarios, Newfoundland and Labrador, Nova Scotia, New Brunswick, and Saskatchewan would have smaller labour forces. The outcomes for the other three provinces differ in the various scenarios.
In all ten provinces, the participation rate drops between now and 2031.
(The three northern territories were not included in this analysis.)
Source: Martel, Laurent; Eric Caron-Malenfant; Samuel Vézina; Alain Bélanger. “Feature Article: Labour Force Projections for Canada, 2006-2031.” Canadian Economic Observer, June 2007. Statistics Canada catalogue no. 11-010-XIB.
http://www.statcan.ca/english/freepub/11-010-XIB/11-010-XIB2007006.pdf
(accessed 16 June 2007).
Both figures reproduced in the post are from that source.
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