Demographics and the Challenge for Canada
Dec 22, 2010
Maclean’s magazine recently published a lengthy piece on the impact of our aging society and the picture isn’t a particularly encouraging one.
In “What the boomers are leaving their children,” Jonathan Gatehouse notes that this coming January will see the first baby boomers turn 65. This post-Second World War generation numbers some 76 million in the United States and almost a third of Canada’s population. It is estimated the ratio of Canadian workers to retirees – currently five to one – will have been halved by 2036.
The new government in the United Kingdom recently tried to reduce expenditures and cut back services in an attempt to address these demographic challenges. We saw what resulted – in November some 50,000 angry students gathered in London to protest cuts to education. But there are really only two options in attempting to address the demographic shift now underway – massive spending cuts and reductions or tax increases and public investment.
This aging of our population has dramatic effects on the shape of our workforce. One estimate has Canada’s baby boomers costing Ottawa and the provinces an extra $1.5 trillion in health and pension expenses over the next 50 years. The Canadian Medical Association says 2500 new long-term care facilities will be needed in the next two decades to accommodate the doubling of Canada’s 65-plus population which will take place by then. And the Canadian Nurses Association predicts that we will be short some 60,000 RNs by 2022.
Think that’s bleak? Combine this demographic bulge with a falling birth rate and continuously increasing life-expectancy (now over 80 years) and things look all the more ugly. Old Age Security ($33 billion a year) is already the largest item in the federal budget, and spiraling health costs show no signs of slowing down.
But the main point is that Canada cannot do nothing. Staying pat will mean that our fiscal situation will be dire within 30 years.
So how are Canadians responding to these challenges? By racking up more and more household debt. Canada’s current rate is about 2.5 times what it was in 1989. Some 43 percent of Canadians are concerned about their retirement, yet 32 percent are committing nothing to savings or RRSPs. That’s not even mentioning those without workplace pension plans.
At the end of the day, this aging of the global population can in some ways be viewed as a good thing. Aging happens because people live longer. With birth rates dropping, we can invest more in things like education. But our government(s) need to make some major decisions very soon in order to begin to address the challenges now emerging. And hopefully they realize that investing in things like pensions and public services will be a much more prudent strategy than attempting to slash budgets.
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