The Canadian Press

A new report on aging suggests the demographic crunch facing Canada is manageable, but only if government and business start making appropriate adjustments.

The TD Bank study is the latest of a string of recent reports to warn about the adverse impact on Canada and its economy as a result of the coming wave of retirements by baby boomers.

But while most have predicted severe labour shortages, stalled growth, lower living standards and fiscal squeezes on governments, TD economists Don Drummond and Francis Fong say the consequences may not be as dire if proper policies are adopted.

“If we don’t do anything, the Canadian economy will be stalled and there will be serious consequences,” concedes Drummond, the bank’s chief economist.

“(We) will not have labour shortages like people are talking about,” Drummond said. “We will sort this out, but there will be a price to pay for sorting this out.”

Last month, Parliamentary Budget Officer Kevin Page said the federal government will face a structural deficit of about $20 billion in five years because more Canadians will transition from tax-paying workers to services-using retirees.

Other studies, including by the Conference Board of Canada, have projected severe labour shortages in Canada.

Immigration alone won’t solve the problem since, according to the C.D. Howe Institute, immigration levels would need to rise 2.5 times to meet the country’s historic labour force growth.

The TD study agrees that fewer Canadians will be available to work. Seven million baby boomers or more than one-third of the current labour force are set to retire over the next two decades, but TD said there are strategies that can mitigate the impact.

Those retirements begin as early as next year, when the first wave of those born in the largely post-war baby boom reach the age of 65.

Drummond notes that it will take two decades for most of the baby boomers to pass through retirement age, and that both governments and businesses have time to make adjustments.

One of those adjustments is to increase the labour participation rates of traditionally under-represented groups such as women, seniors, aboriginals and recent immigrants. Already the participation rate of workers 55 and older has gone from 23 per cent to 35 per cent in little more than a decade.

Drummond said, for example, that businesses must be more flexible in accommodating senior workers who want to ease out of the workforce over a period of time, rather than abruptly retire.

And they should offer incentives to attract women in non-traditional jobs, to train workers and to tap under-represented groups such as aboriginals and immigrants.

The report said governments need to seek immigrants with skills needed in Canada, and improve the integration of immigrants into the labour force through language training and programs to speed acceptance of their credentials.

The report is especially critical of economic barriers facing lower-income Canadians in seeking post-secondary education, noting that even more jobs in the future will require higher education.

It estimates that tuition costs have risen 19 per cent from 1997 to 2007, yet government programs are of more benefit to students from the richest families than those from the poorest. That’s because programs such as tax credits and education savings plans disproportionately favour the affluent.

“Ultimately, an effective needs-based program is necessary to ensure that all Canadians have equitable access to higher education,” the TD report states.