The Conference Board of Canada’s long-term forecast Canadian Outlook 2010 includes an excellent chapter on labour markets written by Julie Adès. It offers a clear, well-researched description of the impact baby boomers will have on this country’s labour market in the next 20 years. Adès explains that what lies ahead has implications for all of us as we make career decisions and plan for retirement. 

“Given the role the baby boomers played in shaping the labour market over the past several decades their retirement will also have major consequences for Canada’s job market in the future,” she writes. 

A bit of background first. The oldest Canadian baby boomers turn 64 this year. The average retirement age was 61.9 last year, which means that an awful lot of professional Canadians will head for the exits in the next two decades. That will open positions in the senior ranks of organizations across the country. “Because the baby-boom cohort is largest at the tail end, retirement will accelerate through most of the long-term forecast horizon,” writes Adès. 

It is true that the labour market impact of Canada’s aging population has been delayed by the recession. Some older workers have postponed retirement as a result of income and investment losses. The Conference Board of Canada’s January 2010 consumer confidence survey found that 29% of respondents aged 55 to 64 said they would delay retirement by more than a year. Among Canadians 45 to 54, 36% said the same. But this may turn out to be an overstatement, given the rebound on Canadian capital markets and the fact that our recession was mild by historic standards (unemployment appears to have peaked at 8.7% this time around, compared to 9.4% in the 1980s and 9.6% during the 1990s). 

The report makes four important predictions:

• The rate at which Canada’s labour force expands will slow down in the next 20 years. This is a measure of the number of Canadians over the age of 15 who are either working or are actively looking for work. Aging boomers will be replaced to some extent by immigrants and young Canadians entering the workforce for the first time. Still, The Conference Board of Canada estimates that the labour force grew 1.4% each year between 2006 and 2010, compared to an annual growth rate of 1.8% in the first half of the decade. Growth will soften further in the future, to a measly 0.4% per year between 2026 and 2030.
• Labour force participation rates will benefit from the economic recovery, but will begin to drop steadily in 2012. The participation rate is calculated by dividing the number of Canadians in the labour force by the total number of working age Canadians. It will rise to a high of 67.5% in about two years, and then turn down sharply. The Conference Board of Canada predicts a participation rate of 62.6% by 2030.
• As the labour market tightens, wages will rise. The average weekly wage, measured across industries climbed 2.4% annually between 2006 and 2010. It’s predicted to rise 3.4% in each of the next five years, and stay close to 3% annually as far out as 2030. By that time, wages are predicted to be 21% higher than they are this year.
• Surprisingly, Canada’s economy will become more productive as the workforce ages. “Many conditions will set the stage for growing productivity,” explains Adès in her report. “First, the aging of the labour force will result in proportionately more experienced workers. Second, greater trade openness will send more of our low-skill and labour-intensive jobs to low-wage countries. Third, the surge in university enrolment following the 1990-91 recession signals a trend that will increase the share of highly educated workers in the labour force.”

I think we can draw a couple of conclusions from all of this. Your professional stock will rise as the executives in your organization retire. Take advantage of your improved bargaining position. If you can afford to, go back to school full- or part-time. A lot of unemployed Canadians have used their time off to hit the books, and they’ll enjoy an edge because of it. Finally, think about working past 65. Given Adès’ predictions about wage growth, your high-earning years may be better than you ever imagined.