Aging Workforce an Economic Tsunami-in-Waiting

Canada is about to be hit by a demographic tsunami in slow motion, with profound and lasting effects on our economy and our society.

By Glen Hodgson, Special to the Vancouver Sun

We often joke that there are only two inevitable things in life: death and taxes. That may be true for us as individuals. But for societies and nations as a whole, the most inevitable and unstoppable force of all is demographics. The rate of population increase and the national age profile are critical drivers of economic growth — since demographics affect both the available workforce and consumer demand.

Canada is about to be hit by a demographic tsunami in slow motion, with profound and lasting effects on our economy and our society.

Among its many economic outlook products, the Conference Board of Canada produces a long-term forecast for the country and each province, to 2035, and we are considering producing a long-term forecast for major cities. Rather than focusing on demand for goods and services, the long-term forecast is based on estimating Canada’s capacity to supply goods and services. This is a “pure” forecast, in that it is driven by the fundamentals of demographics, capital investment and productivity growth, and beyond the medium term is unaffected by short-term risks or the economic cycle.

What does our long-term forecast for Canada say? It confirms that a slow-motion demographic tsunami is about to arrive. We expect that Canada’s underlying growth potential will begin to fade over the next few years, just as the growth potential of other aging industrial nations like Japan and Italy has slowed sharply in recent years.

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