Balancing the Strains of Time

Canada’s Prospects for its Greying Workforce

Saif Qureshi, Section Editor
Ryan Trinidad, Art Director

There is a change that is occurring in our society; one that’s enormous, yet inconspicuous. You can see it on the sidewalk, hear it on the radio, and feel it in the people around you. Slowly, the world’s population is aging. It is only a matter of time before this shift in demographics will prove itself as being one of the most powerful forces shaping the social and economic landscape of tomorrow.

A large part of our aging population can be attributed to the “baby boom generation” (referred to as baby boomers). After WWII, there was a spike in birth rates across several of the Allied countries including Canada, because the soldiers returned home and there was optimism in the air. Couple that with the fact that Canada’s natural growth is also shrinking and the effect becomes more pronounced.

In the past few decades, birth rates have been declining in developed countries due to factors such as rise in wealth, education and urbanization. The fact of the matter is that the baby boom generation did not have many children or even grandchildren. Along with that, higher life expectancies have also sped up population aging.

Jump to today, and the outcomes of these demographic shifts are starting to become more visible in Canada. Many baby boomers have reached their 60s and are now starting to retire. The effects of this are great as baby boomers have made the majority of our workforce for the last 30 years, and losing them means a massive decline in human capital.

On the bright side, the reduction in the labour pool will lower unemployment. The massive retirement of boomers is going to be a wonderful opportunity for all the young and upcoming graduates in the next few decades, as there will be many job openings.

Job Market

According to Statistics Canada projections, by 2030, 1 in 4 Canadians will be of age 65 or over–higher than the percentage of seniors in Florida. In another study, about 1 out of every 5 workers in Canada was close to retirement in 2007. This means that every year approximately 3.6 million people who are leaving the workforce will have to be replaced.

[pullquote]Within 10 to 20 years there will be systemic labour shortages in Canada.[/pullquote]

This number will grow every year. If current government policies and general trends continue, chances are that very soon there will be more workers retiring and less young graduates who can fill their places because of the decline in birth rates.

In an interview with the Arbitrage, Tony Fang, Associate Professor of Human Resources Management at York University, says, “Within 10 to 20 years there will be systemic labour shortages in Canada. In the short term, graduates will feel the pain of the recession but in the long run there will be dramatic changes in the labour market.  Organizations and labour force participants that can capture these trends are most likely to succeed.”

If population aging continues as predicted, the picture will likely be much different than what it is now. Students will graduate from university in the subject they love most, as jobs will be available in most industries. They will get an entry-level job in the company of their dreams, and within five years they will become one of the company’s most senior and skilled employees. Next they will be managing several of the company’s large projects with several people working under them. To add to this, most of their friends and peers will be in a similar position. Within 10 to 15 years this could be the new reality of the job market.

However, besides population aging it seems there will be other factors affecting the labour market.

“Certain factors will slow down labour force shortages,” says Fang. “Those factors include economic slowdowns (recessions), productivity growth with the advancement of technology (automation of different jobs which will substitute for labour) [and also] the outsourcing of jobs to low cost countries such as China and India.”

Nevertheless, Fang thinks that labour shortages will occur. “Based on several studies done in the US,” says Fang, “[they] will be short of 10 million workers in about 10 years. But the shortage is not just about numbers but more about a shortage of skills or skilled people who are in large demand.”

“In the past you could get a high paying job in manufacturing, retail [or] trades. But [now] this is too good to be true. Now it’s harder to get a [good] job with a high school education because these types of jobs have moved to China or India. And well-paying union jobs are being lost in big numbers.”

So even though many boomers who are retiring spent their entire careers in industries such as the trades, retail and manufacturing, there will be fewer jobs in these areas in the future, whereas jobs in the service industry will increase. Ultimately those with more education and a higher level of skills are more likely to succeed in the labour market of tomorrow.

There will also be more jobs in industries that are going to grow due to an older population. These include industries like healthcare and financial planning. As more boomers start to enter their sixties or seventies, they will require more medical assistance and drugs, which means more jobs in places such as hospitals and pharmaceutical companies. Doctors, nurses, physiotherapists and pharmacists will all have plenty of work.

Careers in the financial industry will also be growing. With the number of people entering retirement on the rise, these people will turn to financial advisors to manage their retirement savings and other personal investments. Many boomers might want to withdraw their money and put it into more short-term low-risk investments that are more in line with their personal objectives.

Choosing Your Path

Radical changes are coming to Canada’s labour market. So knowing all this, what education and career path should students pursue today? To answer this question, the Arbitrage interviewed Monica Belcourt, the Director of the School of Human Resource Management, and a Professor of Human Resources Management at York University. Her other accomplishments at York include being the founder of the largest HRM program in Canada, and creating Canada’s first Bachelor of Human Resources Management degree.

“I would advise students to choose careers the way people have been doing for generations,” says Belcourt. “What do they like to do? What professions really appeal to them? What are their strong skills (e.g.  Math, English)? If they won a million dollars, what education routes would they choose?”

These are the sorts of questions that students need to be asking themselves. “If they have difficulty answering these questions, then I would advise them to book an appointment with a vocational counsellor,” says Belcourt. “Every university has psychologists in the career centre who can help answer these questions. Then, once a career choice has been identified, go to the Stats Canada web site, and discover what are the employment trends for that job.”

She further explains that “those entering the workforce today can expect to work for about five or more decades, so it is impossible to predict employment trends for that period (and even harder to advise which degree to choose), so that is why I recommend starting a career path by choosing jobs/professions that you LIKE to do, rather than what you or experts think will be jobs with high employment rates.”

Another option that few people think about is entrepreneurship. As the population of older people increases, there is a lot of potential for doing business in areas such as medical and healthcare equipment. “If you have parents or grandparents who have special care or might need it now,” says Michael Reitz, a division president of Genesis ElderCare Centers, “ask yourself what service or product you could offer that would make life at home better for them.”

Experience is Key

The aging workforce is creating new opportunities for older workers. Survey results from the US show that some older workers are thinking about delaying their retirement. Two major bear markets in the past eight years, combined with the splurging habits of the boomer generation, have left very little in their wallets. However, the positive part is that the labour market will need their skills and experience in the upcoming years.

[pullquote]Companies that don’t harness this knowledge will have to discover it all over again, wasting precious time.[/pullquote]

Research shows that productivity levels are the same amongst older and younger workers. The only difference is in physical ability. Thus, it becomes in the company’s best interest to overcome the age bias in the labour force and develop a reputation as a matureworker–friendly organization. Based on this knowledge, companies are trying out new strategies to retain their older employees past the traditional retirement age.

Part-time work and flexible work arrangements are one solution. Older employees can work less hours or work on a project-to-project basis in a consulting role. This will ensure that their human capital remains intact while at the same time they are more comfortable.

Monica Belcourt’s vision of the future workplace is similar. She says, “The old model (going to an office, working for a company for a decade from 9 to 6 daily) will be obsolete. With technology, workers will now choose or negotiate contracts with employers that are project based …not based on location, or face hours. Workers will choose, when, where, how and with whom they will work.”

She adds, “Assignments, short term contracts and projects will be easier to find. Basically, there will no longer be ‘cradle to grave’ employment.” Old and young workers alike will be following this model in the future, and because the nature of work is changing, it will make it easy to “hire” older workers for short-term work.

To solve the problem of older workers’ often outdated skills, companies are providing additional training to older workers to help them deal with these changes. Companies are also realizing the advantage of having a multi-generational workforce. Younger workers usually provide more energy and enthusiasm while older workers provide experience.

Companies such as General Electric are leveraging their workforce’s capabilities by creating mentoring relationships between older senior-level employees and younger employees.

There is also the fear that the knowledge that older workers possess, such as how to do their jobs effectively, will be lost once they leave the company. Companies that don’t harness this knowledge will have to discover it all over again, wasting precious time. To increase the company’s knowledge base and productivity, organizations like the World Bank are creating videos and audio recordings of employees in challenging projects so that they can be used when needed for reference.

Solutions like these will help companies to deal with masses of older workers who plan to retire. For older workers, however, it means increased opportunities and a gradual retirement which eases their financial burdens.

More Opportunities for Immigrants

One area in which the Canadian government needs to step in is immigration. As the economy continues to grow, Canada will need more workers and will have to rely on immigrants to fill the void.

“I think we will continue to see changes in immigration policies that favour qualified workers over family members for the immigrant quotas,” says Belcourt. “As you know, a key issue continues to be that Canada certainly is capable of attracting qualified immigrants (doctors, engineers) in areas that we have need; Canadian employers, however, seem to have difficulty recognizing, appreciating, and paying for the education and work experiences acquired in other countries.”

She further explains, “Some not-for-profit organizations, such as Career Edge, or TRIEC, have been quite successful at creating programs that allow employers to ‘test’ immigrants for a year. In nearly every case, the immigrant, given a chance to prove himself in a Canadian workplace, receives a job offer in his field, commensurate with his qualifications.”

However, with big shortages coming in the labour market, all this should change.  Canada will have a shortage of not only workers but also skills. New immigrants will be able to fill these needs and employers will be more willing to accept their qualifications.

The Silver Lining

After emerging from one of the worst economic downturns in the century, it is hard to be positive about anything. With an unemployment rate of 8.1%, it seems even harder to imagine that we will be facing a labour shortage in a decade. However, economists are certain that this is cyclical and in the upcoming decades the workforce will be too small.

Younger workers and those currently preparing to enter the workforce should take advantage of this knowledge by looking towards more education. In the coming years, higher-skilled jobs will grow, whereas low skilled jobs will decline, meaning that despite the shortage of workers, employers will be looking at candidates who possess those skills that are needed.

The boomers need to prepare for the new labour environment also by upgrading their skills. However, the workplace needs to adapt more towards them. This means that employers need to create flexible and more viable opportunities for older workers so that they are comfortable in their jobs. Employers also need to focus on retaining this human capital before it’s too late or else they will be losing their company’s most precious assets.

Although there are plenty of opportunities that will arise in the coming decades, it’s up to the members of the future workforce to be ready to grab them.

ARB Team
Arbitrage Magazine
Business News with BITE.

Liked this post? Why not buy the ARB team a beer? Just click an ad or donate below (thank you!)