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Like most developed economies, Canada’s workforce is changing because of an aging population and an accelerating rate of retirements. In 2023, 22% of Canadian workers were aged 55 and older, a significant increase from 13% in 2000.
These changes in population dynamics will require some businesses and industries to adapt. Some industries will be more affected than others, such as the skilled trades, health care and agriculture, where labour and skills shortages are already an urgent concern.
Because of its direct impact on the supply of labour and consumer demand, an aging population will change what the labour market and economy look like. Without planning, the costs could be significant: labour shortages, productivity losses and knowledge gaps that ripple across industries.
The question this raises for policymakers, employers, CDPs and workforce planners alike is: What do sustainable economic growth and workforce resilience look like in the face of this demographic shift?
Drawing on the Labour Market Information Council (LMIC) report Labour Market Resilience in the Face of an Aging Population, this blog introduces the implications of Canada’s aging workforce and shares trackable and practical metrics – like the replacement ratio – to identify high-risk occupations and the regions most affected. It begins to unpack how this metric can support strategic workforce planning and respond to the expectations of a changing workforce.
For a deeper dive, we invite you to join LMIC’s free Sept. 29 webinar with CERIC, where we will engage with participants to explore how the replacement ratio can be a useful tool as part of strategic workforce planning and meeting the expectations of a changing workforce.
The impacts of an aging population
An aging population might seem abstract, but its implications are quite real.
As Canada’s population ages, the proportion of working-age Canadians will decrease. This means a shrinking tax base, increased demands on social security and health-care systems and higher pressure on labour sectors that have an overreliance on mature (retiring) workers.
“Without planning, the costs could be significant: labour shortages, productivity losses and knowledge gaps that ripple across industries. ”
These challenges, however, do not have to be insurmountable. While smaller workforces may lead to labour shortages, these can be effectively managed through careful, proactive planning.
Planning for workforce resilience with labour market information
To do this effectively, it’s important to have an early indication of trends using good LMI. Accurately identifying where the most risk exists is the first, proactive step in building workforce resilience.
This is where the replacement ratio can be quite useful. The replacement ratio compares the number of workers aged 15 to 54 years to the number of mature workers (older than 55 years).
Replacement ratio = Employed workers aged 15 to 54 years / Employed workers aged 55+ years
It can be used as a key tool for assessing the vulnerability of specific occupations and regions. Showing where retirements pose the most risk of significant workforce gaps can help inform workforce planning.
But to whom does this matter? And who should be using this metric? Simply having LMI and metrics is one part of the equation – but actually using them for actionable and impactful goals can feel abstract.
That’s why it’s important to highlight how various stakeholders – including policymakers, workforce planners and CDPs – can directly use LMI to inform advising, planning and policy development. By leveraging this information:
- Policymakers and strategic workforce planners can use this information to make targeted interventions and develop sector- and community-specific programs that help mitigate the potential impacts of an aging population.
- Educators can use this information to encourage youth participation and shape training programs in sectors where we know demand is growing –whether due to shifting consumer needs or increased retirements.
- CDPs can use this information to support job ]seekers and organizations through workforce transitions – from renewal to retirements – and help put LMI into action.
When used effectively, the replacement ratio can have a real impact not only at an individual level, but at a broader societal level as well.
Collaborating on solutions for Canada’s aging workforce
We also want to hear from others who are navigating these transitions – whether by emailing us at research@lmic-cimt.ca or by sharing your experiences during the webinar. From developing systems to transfer institutional knowledge to newer generations or findings ways to retain critical expertise, the impacts of an aging workforce are being felt at a practical level across the labour market.
We are also interested in sharing and learning what a workforce that meets the expectations of an aging population looks like. From supporting diverse age groups within teams and organizations, to ensuring pathways to upward mobility for all workers, this is an opportunity to reflect on practical ideas and solutions for a stronger future workforce.
While the aging workforce certainly presents challenges, it also provides opportunities for the labour market to strategically plan and build a resilient workforce, ensuring long-term success and economic stability. Though the upcoming webinar, we hope to leave participants encouraged to deepen their understanding of the aging workforce’s impact and how we can use LMI to empower us to confidently navigate a changing labour market.
