page 1 meeting the challenges of our future labour market applied research branch human resources...

Meeting the Challenges of our Future Labour Market

Applied Research Branch

Human Resources Development Canada

ONESTEPKingston, Ontario

Sept 26, 2002

Purpose of presentation

• To present the challenges Canada will face with regard to the ageing of its population.

• To discuss potential scenarios to deal with these challenges.

The number one challenge: the changing ratio of producers to consumers

0.40

0.42

0.44

0.46

0.48

0.50

0.52

0.54

19

76

19

81

19

86

19

91

19

96

20

01

20

06

20

11

20

16

20

21

20

26

20

31

20

36

20

41

Source: Socioeconomic Studies, ARB projections

Labour Force as a Proportion of the Total Population

Particularly worrisome is the projected increase in the number of those aged 55 and over in the future.

2001 2040

Source: Census 2001 and Socioeconomic Studies, ARB projections

75+

55-74

25-54

0-24

AGE

Current and Projected Age Distribution of Canadian Population

Female Male Female Male

The elderly-dependency ratio is projected to increase throughout the country.

0 10 20 30 40 50 60 70

Canada

ON

Man

BC

Sas

Alb

PEI

Que

NS

NFLD

NB

Prov

ince

Those age 65 + as a percentage of those aged 25-64

2000

increase by2020increase by2040

Source: Socioeconomic Studies, ARB projections

People are spending a lot more of their lives in school and in retirement.

Number of years that men can expect to spend in and out of employment over the course of their lives in a

typical OECD country

0

10

20

30

40

50

1960 1965 1970 1975 1980 1985 1990 1995 2000

Expected number of years in employment

Expected number of years not in employment

How can we meet this challenge?

1. By increasing the number of producers

2. By increasing productivity

1. Increasing the number of producers

• Fertility Rates• Immigration• Hours of Work• Increased Participation of Disadvantaged

and Low-Skilled• Female Participation Rates• Participation of Older Workers

There has been a general downward trend in fertility rates in Canada.

• With the exception of the boom between 1946 and 1964, fertility has been decreasing throughout the past century.

• While modest increases cannot be ruled out, it is unlikely that we can rely on a substantial increase in the fertility rate as a source of future population growth.

Fertility rates per woman in Canada

Source: Statistics Canada

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Immigration is unlikely to significantly alter the producer-consumer ratio

• An annual level of immigration equivalent to 3% of the Canadian population (916,000 immigrants in 1999) would be required to slow the decline in labour force participation.

• Eventually, participation rates would decline anyway as immigrants tend to adopt Canadian fertility and retirement patterns.

Historical and projected participation rate of the Canadian

population (15 and over) with various immigration scenarios

54

58

62

66

70

1960 1970 1980 1990 2000 2010 2020

Immigration:0.75%Immigration: 1%

Immigration: 3%

Source: Labour Force Survey and ARB demographic projections using the model PMEDS-D

Historical Projected

Increasing hours of work

• In 1995, 73% of Canadians were not interested in working more hours. Those who were, tended to be those who had low-skilled jobs or low weekly hours.*

• Moreover, in 1998, Canadians who worked more hours were more likely to report dissatisfaction with life and with work-family balance and were more likely to report feeling time-crunched.†

† Source: J. Frederick and J. Fast. Canadian Social Trends, Statistics Canada. Summer 2001

Data: Survey of Work Arrangements, 1995

Proportion of working populationdesiring fewer, the same, or more hours

0

10

20

30

40

50

60

70

80

Fewer hours

Samehours

Morehours

6%

67%

27%

* Source: Drolet, M and R. Morissette. Research Paper Series No. 104,Analytical Studies Branch, Statistics Canada

Increasing hours of work: part-time workers

• Part-time employment represented about 18% of total employment in 2001.

• 74% were voluntarily working part-time.

• Only about half of those working part-time voluntarily stated it was because of personal preference.

• Expected future labour shortages may create opportunities for full-year employment for those employed part-time involuntarily.

0

5

10

15

20

25

30

Voluntary part-time employment

Involuntary part-time employment

10%

3%

27%

7%

Source: Labour Force Survey

Voluntary and Involuntary Part-time Employment, 2001

Males Females

Disadvantaged and low-skill individuals have the potential to increase the number of producers.

• Disadvantaged groups include: Aboriginals,

persons with disabilities, lone parents and low-

skilled workers.

• Combined they may significantly contribute to

increasing the overall number of producers

• But, they all face important barriers to employment.But, they all face important barriers to employment.

Increasing human capitalhuman capital is key to increasing labour force participation of disadvantaged and low-skilled individuals.

• A sharp divide exists between participation and employment rates for low and high-educated workers

• Improving low-skilled individuals’ education and skills will improve their opportunities.

• Potential future labour shortages will also increase opportunities for the low-educated.

Source: Labour Force Survey 2001

High school diploma or less

At least somepost-secondary

Participation and Employment Rates(for those aged 25-54, 2001)

40

50

60

70

80

90

100Participation Rates

Employment Rates

78.7%

72.5%

88.7%83.9%

The female participation rate levelled off during the 1990s...

• After three decades of steady increases, female participation rates remained relatively constant in the 1990s (at around 60%).

• Recent research shows that the levelling off of the rate primarily reflects the catching up of women’s participation rates with those of men.

Female participation rate, 1976 to 2001 (aged 15+)

40%

45%

50%

55%

60%

65%

1976 1981 1986 1991 1996 2001


There is limited scope for increasing general labour force participation among women.

• Although a gender gap continues to exist, female participation rates have converged towards those of men.

• Without policy changes, the gender participation gap is not projected to decline significantly in the future.

0

20

40

60

80

100

Male 2001

Female 2001

Female 1976

Canadian Participation Rates, bysex and age group, 2001 & 1976


15-24 25-34 35-44 45-54 55+

66

63

58

92

80

54

89

76

48 34

19

18

Compared with the late 1980s, early retirement in Canada is now more common.

Source: Patrick Kieran. “Early Retirement Trends”. Perspectives, Winter 2001. Statistics Canada; Data from the Labour Force Survey

0

10

20

30

40

50

1987-1990 1997-2000

29%

43%

Early Retirement as aPercentage of Recent Retirement

• Between 1987 and 1990, only 29% of recent retirees retired before age 60.

• By the 1997-2000 period, the rate had increased to 43%.

Some groups are more likely to retire before age 60.

Those more likely to retire

early are:

• Public sector employees

• Those with higher incomes

• Those with higher education

• Those who live in provinces with higher unemployment

Public Sector

BachelorDegree

NationalAverage

Source: Patrick Kieran. “Early Retirement Trends”. Perspectives, Winter 2001. Statistics Canada; Data from the Labour Force Survey

20

25

30

35

40

45

50

55

60

65

70

GraduateDegree

63%58%

52%

43%

Early Retirement as a Percentage ofRecent Retirement (1997-2000)

2. Increasing productivity

• Human Capital– children– youth– adults

• Physical Capital– capital/labour ratio– natural resources

• Economic Efficiency– innovation and technological progress– labour market efficiency– product market efficiency

Human capital is likely to have a key role.

• Ageing will create scarcity of labour relative to capital.

• This will increase future wages and create greater incentives for investment in skills.

• Increased human capital, if realised, will help smooth the demographic transition towards an older population.

This optimistic scenario hinges critically on:

• Continued strong demand for skilled workers

• Investment in the skills of children, youth and

adults

There already is evidence that the demand for skills will be there.

• The knowledge-based economy is creating a demand for a more highly skilled and adaptable workforce.

• Employment growth is highest for those with post-secondary education and in knowledge occupations.

• As a result, labour shortages are anticipated, particularly for skilled workers.

Employment growth is highest for those with post-secondary education...

• Employment growth in jobs held by those with a high school diploma stagnated in the 1990s.

• Employment growth was strongest amongst those with a post-secondary diploma or degree.

Less than High School

High School Diploma

Post-secondary Diploma or Degree

90 91 92 93 94 95 96 97 9870

80

90

100

110

120

130

140Index (1990=100)

Employment Growth by Highest Level of Education Attained (Index (1990=100))

Source: Industry Canada compilations based on Statistics Canada (LFS) data

… and in knowledge occupations.

• The part of Canada’s economy that is based on knowledge has become vital to our performance.

– Employment has grown three times faster in the knowledge occupations than in the rest of the economy over the 1984-2001 period.

– For example, employment in the information technology (IT) sector doubled in 1996-2001.

Indexes of employment (1984=100)

80

100

120

140

160

180

'84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01

Knowledge Management Data Services Goods

Source: Labour Force Survey.

Demand for skills is expected to increase in the foreseeable future.

• In 2001, those with post-secondary qualifications accounted for 58% of employment.

• It is expected that 70% of the jobs to be created by 2007 will require post-secondary qualifications. Meanwhile, less than 10% will involve less than high school.

• The educational demands of employers are likely to continue rising past the 2007 projection period.

Employment in Canada by skill level

0%

5%

10%

15%

20%

25%

30%

35%

2001 Employment Share Share of growth, 2002-2007

Source: COPS Reference Case 2002, Socio-Economic Studies, ARB.

Less thanHigh School

GenerallyRequires

High SchoolDiploma

GenerallyRequires College/

ApprenticeshipTraining

GeneralRequires

UniversityDegree

Management

The path of lifelong learning begins in early childhood.

• Poor outcomes in childhood can undermine subsequent education and skills development and limit future employment success and quality of life.

• A significant minority of Canadian children are not developing the skills and ability to learn that will help them live and work to their full potential.

• More boys than girls have learning and behaviour problems.

Incidence of identifiable learning and/or behavioural problems among

children aged 0-11 (1998-1999)

Source: National Longitudinal Survey of Children and Youth

0

5

10

15

20

25

30

Boys Girls

Learning Behaviour Vulnerable

12.3

17.2

26.8

13.5

11.1

22.024.4

National Average

Summary of Pathways of 18-20-Year-olds, December 1999*

High School

GRADUATES 75.8%

DROPOUTS* 11.4%

CONTINUERS 12.8%

Post-Secondary Education

GRADUATES 6.9%

LEAVERS 9.2%

CONTINUERS83.9%

70%

8.5%

10.0% 51.1% 63.1% 11.4%58.2% Employed Full-time

Employed Part-time

59.3%

18.2% 34.3%53.2% 22.2% 22.8% 53.8%

No Longer in School

Labour Market

Not Working 36.7% 22.5% 14.6% 14.6% 19.0% 34.8%

91.5% 30% 100% 100%N/A N/A

* This figure presents estimates for 18-20-year-olds, including the high school dropout rate (11.4%). This rate differs from the 20-year-old dropout rate reported in Chapter 2 (12%). The latter is preferable as it accounts for the fact that some youth complete high school at a later age. Yet, for the purpose of presenting reliable estimates of education and labour market pathways, it is necessary to present 18-20-year-old results here.

Youth participation in post-secondary education is rising and is among the highest in the world

• Most youth will meet the educational requirements of the new economy:– High school dropout rates

among 20-year-olds declined from 18% to 12% in the 1990s.

– School attendance rates rose rapidly in the 1990s.

– Now, more than 60% of all 25-29 year olds have post-secondary qualifications.

% of those 25-29 with post-secondary qualifications

010203040506070

'90 '92 '94 '96 '98 '00Other Post-SecondaryDegree

Source: Labour Force Survey.

But educational attainment varies by province.

0 20 40 60 80

Can

QC

ON

NS

NFLD

PEI

ALTA

NB

BC

MAN

SASK

Degree Other Post-Sec.Source: Labour Force Survey

Percentage of those aged 25-29 withpost-secondary qualifications by province, 2001

50.3

52.0

53.1

56.5

58.0

58.2

59.5

62.3

64.0

67.3

61.5

In Canada, job-related training appears to be lagging behind other countries.

• In Canada 31% of firms invest in training. This compares to 74% in Japan and 80% in the UK.

• In 1994-95, the rate of participation in job-related training (employer and non-employer sponsored) among the employed population was 36% in Canada, 48% in the UK and 42% in the US.

Setting priorities

• Necessity to develop skills will intensify

• Lifelong learning needs to be encouraged and developed

• Increasing labour market participation will require policies that focus on:– fostering employability– removing barriers to employment; and– improving skills

Setting priorities (continued)

• New immigrants face challenges related to language and foreign credentials

• Work-family life, child care, housework issues will remain important

• Facilitating new career-development after retirement, volunteering and active ageing will be key for increasing the contribution of older workers to the economic pie.

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