Domestic measures can't solve worker shortage
(By Don Cayo, Vancouver Sun) - Canada could lessen its economic imperative to continue accepting new immigrants, but the realistic alternatives -- although worth pursuing -- won't be enough to take up the slack when baby boomers retire.
That's the nub of the case made by the Conference Board of Canada in a new paper that reinforces several proimmigration arguments I made in a column last week, and analyzes the potential alternatives.
"While other options for growing the Canadian labour force are available and should be pursued," it says, "immigration remains one of the most effective means of underpinning Canadian economic growth over the medium term." One of the other options -- delaying retirement for existing workers -- is already catching on, thanks largely to recession-related losses on most older Canadians' retirement savings. Many will simply have to work a few years longer to rebuild their portfolios.
But this labour pool is certain to be tapped out within a few years, and it'll merely defer an inevitable sharp drop in available workers when the huge baby boom generation retires at more or less the same time.
Three groups who are already here -- women, aboriginals and disabled people -- could be part of a longerterm solution if a higher percentage can become active in the workforce, the Conference Board said.
But the numbers of new workers coming from these groups is relatively small compared with the contribution of immigration to labour force growth.
In Canada today, about 75 per cent of working-age men and 65 per cent of women are active in the labour force. For disabled men and women, the numbers are 56 and 46 per cent respectively (up seven or eight percentage points from a few years ago).
And for aboriginals, the number is about 63 per cent.
If the participation of these groups were to increase a few percentage points to the national average, it would provide a big boost in workers, but not big enough to sustain the continuing need.
For example, the Conference Board makes a detailed calculation of the impact of increased participation among the fast-growing population of aboriginals.
It concludes it would draw in about 50,000 working-age people who aren't in the labour force now, and about 200,000 by 2026 as today's children become tomorrow's workers.
"This is equivalent to a one-per-cent increase in total Canadian employment, or about 80 per cent of a single year's immigration at current levels," the report said.
Of course, there are still many compelling reasons to focus on education and employment for disadvantaged groups like aboriginals and the disabled.
But the impact on Canada's shrinking labour force, while welcome and worthwhile, will be relatively small.
The other thing Canada could and should do, the Conference Board says, is focus on productivity -- on working smarter to get more output from each hour a worker spends on the job.
"We have under-performed on productivity growth for about 25 years relative to our Organization for Economic Cooperation and Development comparators, particularly the United States," the report states. "The result is an income gap with the U.S. that is currently estimated ... at around $7,000 per capita." A final alternative, I suppose, would be to forget about growth and settle for the population we have now. Certainly this was a popular choice from anti-immigration critics of my last column on the subject.
The trouble is that choosing no growth won't maintain the status quo.
It's a recipe for strife.
First of all, we wouldn't have a workforce large enough to keep our GDP -- the collective earnings of the country -- at the level we enjoy today, let alone find caregivers and service providers for the fast-growing legions of old people that we can expect.
Secondly, the only way for someone to get ahead in a no-growth society is at the expense of someone else.
Young people, now at the low end of their lifetime earning expectations, could improve their lot only if the older generations relinquish some of what they've accumulated over the years.
Hands up if you think that would ever happen gracefully.
