The aging population in Canada might soon drag the country into a labor force shortage, concludes a report released here on Tuesday by Canadian Department of Finance.
The number of working-age Canadians for every senior aged 65 and above will fall from about 5 now to 2.7 in 2030, according to the report.
Unless productivity or job involvement improves, the aging population will be expected to significantly slow the country's economic growth and lead to labor force shortage, the report says.
Canada will need to double its efforts to boost productivity "so that workers can produce more and better goods and services and be better paid," and to focus on "key drivers" of economy, including innovation and investment.
Canadians aged 55 and above, for example, are less active in the labor market than in other advanced countries, and job involvement is still a "challenge" for a number of groups, including aboriginals, recent immigrants, less-skilled individuals, young people and the disabled.
The federal government says that it has already taken steps to address the situation, such as prohibiting most federally regulated employers from setting a mandatory retirement age and allowing the voluntary deferral of the Old Age Security Pension paid to most Canadians once they reach the age of 65.
Moreover, the aging population is also expected to reduce the growth rate of government revenues and public expenditures, aggravating age-related issues such as health care and elder supporting.
For instance, federal funding for health care will maintain a steady growth in the next few years, while starting in 2023 the age of Old Age Security Pension will be raised to 67 since costs associated with the program are expected to increase by more than 10 billion Canadian dollars (US$10.1 billion) over the next five years as the first baby-boomers reach retirement age.
However, the financial pressure can still be eased over the long term by "responsible expenditure management", including capping spending on national defence and international assistance, says Ottawa.