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Industry Perspectives Op-Ed: Baby boomer retirements will lower labour participation

Bill Ferreira
Industry Perspectives Op-Ed: Baby boomer retirements will lower labour participation

The retirement bubble of the baby boom generation — those born between 1946 and 1965 — has burst and labour markets are feeling the pinch.

The youngest workers from this generation are now 54 years old.

As workers from this demographic group continue to retire, the task of filling labour force gaps will fall increasingly to a smaller pool of available younger workers.

The labour force participation rate, which is the proportion of available workers to the population aged 15 years and older, grew rapidly from 1976 to 1989, largely due to the entrance of baby boomers and women into the labour force. It peaked at 68 per cent in 2008, but is expected to decline to 62 per cent by 2028, as retirements loom large in the Canadian economy.

The Canadian construction industry is following similar trends. Canada’s construction labour force grew by 771,000 workers between 1976 and 2018, buoyed by strong market demand. However, the participation of younger workers 15 to 24 years old and that of workers 55 years and older followed different trajectories.

From 1976 to 1998, the proportion of workers 55 years and older hovered around 10 per cent of the total Canadian construction labour force. As the oldest of the baby boom generation turned 55, the proportion of older workers rose steadily from 11 per cent in 2001 to 20 per cent by 2018.

While workers in some service-based industries can prolong labour force participation well into their late 70s, the rugged nature of construction work may not be so conducive to prolonged participation. The participation of baby boomers, now between 54 and 73 years old, is likely to decline steadily in construction over the coming decade.

At the same time, the proportion of younger workers aged 15 to 24 years dropped dramatically between 1976 and 1996, from 23 per cent to 11 per cent. That rate rose modestly to 16 per cent in 2008, but by 2018 younger workers accounted for just under 12 per cent of the industry’s labour force. That number could dip below 10 per cent by 2028.

Attracting adequate numbers of younger workers into the industry may become increasingly difficult as youth are projected to account for a smaller share of the overall population. The construction industry is also likely to face stronger competition for young workers from other industries.

Over the next decade, demand growth is expected to increase the construction labour force in most provinces across Canada. However, all provinces will see declines in the labour force participation of older workers, and in some of these provinces, declines are expected in the participation rates of younger workers as well.

Labour participation is likely to see stronger declines in the Atlantic provinces, which have an older age profile and face a negative rate of natural population growth — births minus deaths.

Across Canada, immigration will be a key driver of new population and labour force growth. If the industry fails to facilitate the entry of new Canadians into construction, the labour force may grow more sluggishly than predicted.

The construction industry also faces another unique risk. If activity slows significantly, older workers may decide to hang up their hats earlier than anticipated. Slow growth may also deter younger workers from joining the industry and increase the pace at which those already in construction leave to work in other industries.

Over the coming decade, the retirement of some 350,000 construction workers in onsite and off-site occupations will significantly impact the current labour force.

That will force the industry to think creatively about labour market planning. The efficient operation of construction labour markets will rest on the enhancement of recruitment and training efforts aimed at younger workers, the diversification of labour force recruitment to include traditionally underrepresented workers such as women and Indigenous peoples, and the ongoing promotion of careers in construction to younger workers under 30.

To ensure the industry continues to recruit its share of the best and brightest young workers, it will need to become more creative in its approach to career marketing and promotion. With growing competition for these workers, traditional recruiting efforts are unlikely to be sufficient to meet the industry’s future labour force needs.

Bill Ferreira is the executive director of BuildForce Canada. Send comments and Industry Perspectives column ideas to editor@dailycommercialnews.com.

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