Employment rate for Canadians 15-64 at record levels, but aging population limiting overall labour market recovery

An Aging Population: The Demographic Drag on Canada’s Labour Market

Summary

• Many point to Canada’s low unemployment rate (5.5%) as an indication of the strength of our economic recovery from the pandemic. Yet by other indicators it would appear that Cana­da’s labour market has not yet fully recovered.
• For instance, the 2022 employment rate is 0.2 percentage points lower than in 2019 and the labour force participation rate is 0.4 per­centage points lower. At the same time, Canada is experiencing a historic labour shortage with 958,000 vacant positions.
• Canada’s aging population is one factor that may be contributing to the conflicting statis­tics, so this bulletin reviews labour statistics segregated by “working age” individuals (aged 15 to 64) and “seniors” (aged 65 and older).
• In 2022, the working age labour market participation rate is 0.9 percentage points higher than in 2019 and their employment rate is 1.1 percentage points higher than in 2019. In contrast, the labour force participation rate for seniors is 0.2 percentage points below 2019 lev­els and their employment rate is 0.6 percentage points lower.
• More specifically, seniors’ labour force par­ticipation and employment rates have not grown at the same pace as their population growth. Moreover, seniors—who have lower labour force participation and employment rates than work­ing age individuals—make up a larger share of the population (21.9%) in 2022 than they did in 2019 (20.3%). These factors have created a drag on the overall labour market recovery.
• If seniors accounted for the same share of the population in 2022 as they did in 2019, both the employment rate and the labour force par­ticipation rate would be fully recovered. More­over, job vacancies would be reduced by nearly half to 521,941 vacant positions.
• Canada’s labour market challenges will only compound as the population continues to age.