Canada’s Aging Workforce: Participation, Productivity, and Living Standards

As Canadaís baby boomers ease into retirement, there is a timeliness to concerns expressed in the popular media that, as many workers leave the workforce, Canadaís elderly dependency ratio will rise, and more and more retirees will have to be supported by relatively fewer members of the workforce (Globe and Mail 2006; Guillemette 2003). This raises questions as to the economic well-being and average living standards of the population as relatively fewer workers are involved in producing output in Canada. It also poses concerns for the fiscal health and fiscal environment of government budgets as pension and health costs rise and as the traditional tax base of the working population declines in relative size (Toronto Star 2008). Obviously, these concerns are not unique to Canada, but are faced by most Organization for Economic Co-operation and Development (OECD) countries, which have been experiencing declining fertility rates and longer lifespans. They also raise the question of whether Canada and other such countries are going to experience reduced living standards as a result of their aging populations. And, consequently, what is the possible role for public policy to improve economic well-being in light of this changing environment (OECD 2005)? But an aging population and slower labour force growth also provide an opportunity to review a number of labour market, social security, and tax policies with an eye to providing greater flexibility to life-course work patterns and reduced impediments to transitioning more flexibly into retirement, based on workersí range of choices (PRI 2003; SRI 2008; Halliwell 2008).