The Youth Freeze and the Retirement Bulge: Older Workers and the Impending Labour Shortage

By McDonald, Lynn; Chen, Mervin Y. T. | Journal of Canadian Studies, Spring 1993 | Go to article overview
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The Youth Freeze and the Retirement Bulge: Older Workers and the Impending Labour Shortage


McDonald, Lynn, Chen, Mervin Y. T., Journal of Canadian Studies


A decline in the number of entry - level workers, coupled with a reduction in labour force participation rates, foretells a significant shortage of workers in the near future in Canada. Can and will older workers fill this gap? A review of the changes in the Canadian industrial and occupational structures in light of current retirement patterns suggests a tentative yes to the question. Highly skilled older workers found in managerial/professional and technical occupations may well fill the bill if they can be enticed to remain in the labour force. Le declin du nombre d'ouvriers sans formation, joint a la baisse du taux de participation de la main - d'oeuvre, laisse prevoir dans le proche avenir un manque important d'ouvriers au Canada. Les ouvriers plus a@ges peuvent - ils boucher ce trou et veulent - ils le boucher? Une revue des modifications des structures de l'industrie et des occupations du Canada devant le profil des retraites actuelles revele la possibilite d'une reponse affirmative a la question. Il se peut que des employes plus a@ges aux niveaux direction/professionnel et technique puissent bien faire l'affaire si l'on reussit a les persuader de rester dans la main - d'oeuvre.

I. Introduction

In the present climate of concern about Canada's global competitiveness, the retirement of the older worker has come under closer national scrutiny. Amidst widespread downsizing, significant layoffs and escalating unemployment, the emphasis has been on removing the older worker from the labour force through early retirement schemes and through upholding the principle of mandatory retirement.(f.1) However, long - term demographic trends in Canada, namely slowing source population growth and the increasing average age of workers, are likely to initiate a shift in focus away from early retirement. As Canada's workforce continues to grow more slowly and as the workforce itself ages, the contribution of older workers to the Canadian economy is likely to become more critical.(f.2) Instead of retiring early, older workers may be called upon to remain in the labour force, or attempts may be made to entice the early retired to return to the labour force. The past two decades offer a striking picture of changes in the growth of the Canadian labour force. During the 1970s, the labour force increased by 3.2 percent annually; however, during the 1980s, labour force growth declined to 1.9 percent annually and is expected to continue to drop to below one percent in the 1990S.(f.3) This considerable decline can be attributed to two factors, the slowing down of source population growth (aged 15 years and over) and a falling - off of the growth of the participation rate in the labour force. Source population growth, which was above two percent through the 1970s, slowed to 1.4 percent in the 1980s due, primarily, to the baby - bust generation that followed in the wake of the baby - boom generation (Table 1).(f.4) This decline contributed to the condition of fewer entry - level workers throughout the economy. In 1971, the 15 to 24 age group made up 26 percent of the labour force, but in the year 2,000 this age group is expected to make up 17 percent of the labour force.(f.5)

At the same time, there has been a slowing down in the growth of the participation rate in the labour force. From 1969 to 1979 the average annual rate of 0.9 percent dropped to about 0.6 percent in the 1979 - 89 period, which is partially a reflection of the recession in 1981 - 82.(f.6) The biggest drops in participation rates between 1979 and 1989 were for men aged 55 to 64 (from 76.4 to 64.7 percent), and men aged 65 to 69 (from 24.4 to 17.9 percent). As in the entry process of younger workers, some of the decline in numbers of older workers is offset by countervailing processes.(f.7) Nevertheless, overall, there are decreases in the relative number of workers on both ends of the age distribution, a condition which foretells a possible labour shortage in the immediate future.

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