Friday, February 19, 2010

On the inconveniences of Ontario having high structural unemployment and rapid aging

The Canadian province of Ontario is easily the most populous province in Canada, with a population that's more than half again larger than the runner-up province, Québec. Ontario has long been a net receiver of migrants, firstly from the rest of the country then internationally. This, has helped keep Ontario's population young relative to the Canadian average.

Canada's most populous province is also one of the youngest, according to the Census of Population held on May 16, 2006. The proportion of people aged 65 and over is smaller in Ontario (13.6%) than in all other provinces except Alberta, and children form a larger portion of the population (18.2%) than in most other provinces. It is also noteworthy that Ontario was the only province other than Alberta whose population grew faster than the national average between 2001 and 2006.

The relative youthfulness of Ontario's population is due to a combination of factors. The cohorts born in Ontario between the First and Second World Wars were relatively small as the province had one of the lowest fertility rates in Canada at the time. These same small cohorts are the people who are age 65 and over today. Moreover, sustained immigration to Ontario since the late 1980s seems to have had an indirect impact on the number of births. Arriving in the province when they were about 30 on average, female immigrants come to Canada at an age when women are more likely to have children. That is one of the reasons that the percentage of children in Ontario has been higher than the national average since 1996.

Nevertheless, the population is aging in Ontario, as it is in every other part of Canada. The proportion of people aged 65 and over in the province rose from 12.9% in 2001 to 13.6% in 2006. Over the same period, the proportion of people under the age of 15 declined from 19.6% to 18.2%.

The Ontario government's latest projections estimate the province's population to be a bit more than 13.1 million, rising to 17.8 million by 2036, below-replacement fertility being compensated for by net migration, with immigrants providing a disproportionately large share of births. Ontario's share of the Canadian population is projected to rise from 39% now to 44.5% in 2036, while the intensifying urbanization of an already quite urbanized population will lead to the Greater Toronto Area hosting 51.5% of Ontario's population by 2036 (up from 41% now), with the proportion of the population in the 15-64 demographic falling from 69.3% to 60.7% and the proportion 65 and over rising from 13.7% to 23.2% over 2009-2036. Ontario's population is aging, certainly, but not as much as some other polities. Surely Canada's largest and (in aggregate) wealthiest province should be able to handle this?

Not necessarily. Earlier this month, Rick Miner made a blog post at the website of the National Post ("Ontario's coming unemployed legions
) warning that the province faces a crisis of mass unemployment even as the population ages.

[T]he province faces a growing number of people who will be unemployable, due to levels of education and skills that are insufficient to meet the demands of the new innovation economy.

While various policy-makers are grappling with our aging population and the shift to a knowledge economy, no one has put the two together and examined the consequences: More than 700,000 low-skilled Ontarians will be unemployable by 2021. That figure is in addition to the 5% of the population that is traditionally unemployed.

Taken together, it means that in 11 years’ time, more than 1.1 million people in Ontario will be unemployed with no prospects of finding work. That’s like having the entire populations of London, Barrie, Hamilton and Kingston unemployed.

Even worse, the massive unemployment will come at a time when employers will be desperate to find qualified people. Due to demographic changes such as the retirement of the baby boomers, along with the demands for a more highly skilled workforce, it can be safely estimated that more than 1.3 million jobs will go unfilled by 2021.

The skill sets of the workforce just aren't good enough.

Fifteen years ago, the Internet was virtually unknown. Now, it is an essential tool in most workplaces. Many of tomorrow’s high-demand jobs don’t even exist today. These jobs could be anything from nano-mechanic to memory augmentation surgeon or waste data handler. In many cases, jobs that could be filled by an unskilled person today will require a skilled employee by 2021.

In my new report, People Without Jobs, Jobs Without People: Ontario’s Labour Market Future, I have analyzed the data available from sources such as Statistics Canada, the Ontario Ministry of Finance and the Bank of Canada Review, and other materials, including from the United States.

The research shows that even under the assumption of modest population growth, Ontario will still have a major unemployment problem.

By 2021, the experts predict at least 75% of Ontario’s population will require post-secondary education and training in order to be employable. However, if current trends continue, only 64% of the population is expected to have acquired post-secondary credentials by that time.

The study that Miner refers to is here (PDF format). He argues that immigration can't compensate for the low skill levels among the native-born population, since immigrants take a while to catch up to average levels of labour force participation and productivity. A vast multi-pronged approach--increasing the integration of immigrants and other under-represented groups, like women, in the labour force; vastly extending and developing the province's education system; encouraging on-the-job training--will be needed to prevent the province from slipping into very serious economic decline.

Population aging's the primary theme facing the entire world, but as working-age population's shrink relatively or even absolutely it's equally important that people belonging to this demographic have the training necessary to be productive enough to stabilize the economy of a country or region with a rapidly aging population. It's easy enough to expect that among countries with rapidly aging populations and lowest-low fertility, those countries with the more educated workforces (Germany? Japan? South Korea?) will fare significantly better (or less badly) than others (Italy? Spain?).


Mark Arsenal said...

Considering I'm in the middle of a FSW Visa app... Are you trying to tell me I should reconsider my landing site? :P

Michel S. said...

Mark: apart from Alberta, and perhaps BC and Quebec, I doubt any of the other provinces are necessarily in better shape than Ontario.

Randy: if the Ontario population is aging *and* yet forming an increasingly larger share of the Canadian total, how bad is the situation in other provinces? We've heard about the malaise in Atlantic Canada for a long time, but how about the prairie provinces, Manitoba and Saskatchewan?

Cicerone said...

The prairie, afaik, has almost American birth rates, but don't have high immigration rates. The Hutterites, having a birth rate of 7 children/woman and doubling every 20 years will play an increasing role of the Prairie's demography and maybe can stabilize it.

Richard said...

They don't believe in retraining up in Canada? I've no doubt that there is plenty of untrained labor in Canada right now, but the government couldn't encourage retaining or on-the-job training?