News Releases and Op-Eds
Finlayson Op-Ed: Planning Ahead for Ongoing Change? (PeopleTalk Magazine)
Most people are aware that the population in Canada and other western countries is aging, that longevity is increasing, and that the front-end of the large baby boom generation has started to retire. Fertility rates have also fallen, which means the future supply of workers will be under additional downward pressure even as the ranks of seniors swell. But how quickly will our population grow, and age, in the next 20 years? Will employers soon face a dramatic shortfall of working-age British Columbians?
Population data is rich with detail. There is extensive information on different age cohorts, past and projected growth rates, male and female dimensions, longevity, migration patterns, and so on. Below I highlight three trends that will help to shape the economic and labour market environment in the coming decades, drawing on the most recent population projections from B.C. Stats, the provincial government’s statistical agency.
Demographic growth slows: In the late 1980s through the first half of the 1990s, B.C.’s population was increasing by 2.5-3.0 per cent every year. Those days are over. Since 2000, population growth has mostly hovered around one per cent. Looking ahead, the pace is expected to pick up for a time, thanks to higher interprovincial net migration and rising immigrant inflows. However, by the latter part of the 2020s, as births fall well behind deaths, the annual rate of population increase will slip below the one per cent mark, and then continue to edge down from there.
Population aging: The other key demographic development is aging. In B.C., the 65 and over age cohort is growing four times faster than the traditional “working age” population, as that term is defined by Statistics Canada (ages 25 to 64). Today, there are 31 British Columbians aged 65 and over for every 100 persons between 25 and 64; a decade from now, that figure will stand at 40; in twenty years’ time, it will be approaching 50. With the average and median ages both climbing, a smaller fraction of the overall population will be working and producing compared to the past. Yes, more oldsters are likely to stay the workforce once they reach 65 – a trend that is already apparent. However, labour force participation rates will remain relatively subdued among the total population of seniors, as the broader impact of aging dwarfs any upward shift in the share of people aged 65 and over who choose to stay in the workforce.
Urbanization: A third important demographic phenomenon is urbanization. Today, almost seven in 10 British Columbians live in the four main metropolitan areas (Metro Vancouver, Greater Victoria, Abbottsford-Mission, and Kelowna). The proportion of urban-dwellers is projected to creep higher in the next 20 years. At the same time, many smaller communities and rural areas of B.C. are experiencing stagnant or shrinking populations, along with sizable drops in the number of traditional working age residents. In fact, several regions of the province have recorded noticeable declines in what Statistics Canada classifies as the “core” working age population – those aged 25 to 54 – for a more than a decade. Provincial policy-makers have enunciated ambitious plans to kick-start resource, industrial and infrastructure development in the northern two-thirds of British Columbia. But one wonders whether these economic opportunities can be realized if working-age populations continue to dwindle in most non-urban areas of the province.
The most far-reaching consequence of diminishing increases in the size of the population and the labour force will be felt via the impact on economic growth. For 30 years or more, economic growth in B.C. has been primarily driven by two forces:
1) a steadily increasing population, leading to an ever larger domestic market and greater demands for housing, goods and services; and
2) a perpetually expanding workforce. Gains in productivity, the other principal determinant of economic growth, have been underwhelming. This implies that, absent an improbable sustained surge in productivity, the province’s potential economic growth rate can be expected to decrease going forward.
On current projections, real GDP growth in B.C. looks set to downshift by between one-third and one-half, relative to the post World War Two average, by the second half of the 2020s. The good news is that the era of slow economic growth is not imminent, so we have time to plan. Unlike some other advanced economies, B.C. will continue to experience modest population and labour force gains for another 10-15 years.
Indeed, B.C. presents a relatively positive demographic picture by the standards of some other developed country jurisdictions. Japan and a number of European countries are already grappling with the growth-inhibiting effects of near-zero or negative population growth, and here in Canada the Atlantic provinces and Quebec are not far behind. But while B.C.’s population is projected to carry on expanding, aging coupled with the emergence of structurally tighter labour markets promises to have wide-ranging impacts on the job market, consumer spending patterns, the demand for public services, and the tax base available to governments to generate revenue.
Jock Finlayson is executive vice president and chief policy officer with the Business Council of British Columbia.
As published in the Human Resources Management Association's Summer 2015 edition of PeopleTalk Magazine.