Immigrants’ participation in labour force, reduces impact of baby boomer retirement

Labour participation rates among immigrants exceed those born in Canada, one economist says, which is helping offset the impact of baby boomer retirements.

 

In a report Thursday, Claire Fan, an economist at RBC, said that for some time immigration has been seen as a way to counterbalance the impact of an aging population. Beginning over a decade ago, Fan highlighted that large numbers of baby boomers aged into retirement, driving down the proportion of people born in Canada in the labour force.

 

“More immigrants joining Canada’s workforce is helping to mitigate the demographic pressures created by baby boomers retiring as the participation rate of Canadian-born workers continues to decline,” Fan said.

Near the end of 2020, participation in the labour force among immigrants exceeded the Canadian-born population, the report said. At the beginning of 2024, labour participation among immigrants grew to outperform the Canadian-born population by two per cent.

 

“Part of the immigrant outperformance is driven by the fact that they are on average younger. Immigrants have also been retiring later than Canadian-born workers, which is helping to further soften the wave of retirements,” Fan said in the report.

 

The report also highlighted that an aging population will have economic consequences for the country as the demand for goods and services will rise more rapidly than the labour force can meet.

 

“The challenge will likely only worsen over the long term as birth rates in Canada continue to run below replacement rates. In addition, it’s also difficult for governments to increase funding for public services like healthcare out of a shrinking tax base (relative to the size of the population),” the report said.

 

 

Immigrants retiring later

The report also found that immigrant workers above the age of 55 are working longer and delaying retirement, which contributes to the overall outperformance of immigrant populations relative to those born in Canada.

 

“The average retirement age among immigrant workers over the last decade is around 66, according to our calculations,” Fan said in the report. “That’s two years older than the average retirement age of 64 for Canadian-born workers.”

 

 

 

This article was first reported by BNN Blommberg