2016 census—Canadians are living and working longer
Statistics Canada recently released the latest data from the 2016 census. One of the biggest takeaways: seniors are working later in their lives and living longer than ever.
Indeed, in 2015, the labour market participation among seniors increased to the highest level recorded since the 1981 census. Almost 1.1 million seniors, accounting for nearly 20 per cent of the population aged 65 or older, engaged in some form of full-time or part-time work during the year.
Moreover, Canada, like all other high-income industrialized countries, is experiencing an aging population. As life expectancies increase and birth rates decline, seniors now represent a rapidly increasing share of the population. Statistics Canada reports that the share of the population aged 65 and over increased from just 13 per cent in 2001 to 16.9 per cent in 2016. In fact, for the first time, seniors (aged 65 and over) outnumbered children under the age of 14.
As policymakers grapple with the implications of this generational demographic shift, it’s evident not enough is being done to prepare for our aging population. Recent Fraser Institute research shows that these demographic changes will put significant pressure on government finances including health-care costs and income transfer programs such as Old Age Security (OAS) and the Guaranteed Income Supplement (GIS).
By 2047, it’s estimated that the costs of these income transfer programs will increase by 47 per cent. Additionally, as individuals over age 65 account for a greater share of the Canadian population, health-care spending on a per person basis will increase significantly as most of our health-care consumption occurs during our retirement years.
The Trudeau government’s decision to maintain the age of eligibility for public retirement programs at 65 years will be particularly costly. Shortly after taking office, the government reversed a 2012 reform by the previous federal government that would have increased the age of eligibility for OAS and GIS from 65 to 67 years by 2029. It’s predicted this policy reversal will cost the government an additional $10.4 billion in 2030.
Clearly, Canada is out of step with the majority of high-income countries within the Organization for Economic Cooperation and Development (OECD). As a recent study noted, of the 22 high-income OECD countries examined (apart from Canada), 18 countries (more than 80 per cent) are implementing increases in the age of eligibility for public retirement programs.
Even more noteworthy, just under 60 per cent (13 countries) are increasing their age of eligibility to 67 years or older. Five countries are indexing their age of eligibility for retirement programs based on anticipated increases in life expectancy. Canada is one of only five countries maintaining the status quo with no intention to implement reforms in the near future.
Although other OECD countries have been motivated to enact reforms, which will mitigate the financial costs of demographic changes, Canada’s federal government has chosen a path that starkly diverges from its OECD counterparts. In light of current demographic trends, steps should be taken to better prepare the country for fiscal pressures resulting from the aging of our population.