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Aging population and low fertility rates in Canada: The impacts in our society

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The equation is simple. Populations around the world are aging and birth rates are not keeping up and declining. Both factors have profound socioeconomic implications.

For many different reasons, families are choosing to have less children and according to experts this is going to be everybody’s problem eventually because in the future the aging population will mean a decline in the workforce, increase costs in health care and other challenges to worldwide economies, because there will not be enough workers to pay for all the social programs.

Recently some articles reported that the Chinese government was concerned about this problem: the decrease in the number of the workforce and the responses that were going to be necessary to meet this demographic challenge. This makes us wonder: if this has been a matter of concern in a place where there were birth control policies due to overpopulation…what can we expect in other countries? Such as Canada, for example?
Back home, we are dealing with the same issue. Natural population decline and longer average life spans lead to an increasingly small pool of working-aged Canadians (aged 15-64) capable of paying for vital public services. Immigration has always been a key factor to Canada’s population and workforce labour. According to Statistics Canada the country added 1.8 million people, nearly 80% of those new residents arrived from elsewhere in the world.

To discuss about this international trend and the effects on our social economical lives Milénio Stadium interviewed Michael Haan, Associate Professor in the Department of Sociology and Academic Director of UWO Statistics Canada Research Data Centre from Western University London, Ontario. He pointed out some of the initiatives governments around the world are implementing to try to ease this pressure, such as investing in robotics to decrease the necessity of human labour, improving immigration, and even offering incentives to get people to have more children.

In the Canadian context, Professor Haan analyses the possible solutions, reminding us that there’s no silver bullet, but in his point of view the priorities for the government should be to invest in immigration, something that the country has been doing for quite some time, and create flexible working arrangements to keep people in the labour force longer.

professor haan - milenio stadiumMilénio Stadium: Recent reports from the Chinese government related that China’s workforce will drop by 35 million over the next five years, adding pressure on the state pension system and forcing Beijing to adopt new measures to meet the demographic challenge. If this is happening in China, does it mean is a tendency in other places in the world?
Michael Haan: This is indeed happening in nearly every country. In fact, it has gotten so bad in places like Japan that the government is investing heavily in things like robotics to ease the pressure on the labour force. There is now a robot in Japan that can lift elderly people on and off the toilet. Canada’s solution, by contrast, is to admit more than 400,000 newcomers annually. Other countries, like Russia and France, are offering (largely ineffective) incentives to get people to have more children. Very different approaches to a similar problem. It will be interesting to see how China handles this, because they’ve long been trying to curb population growth, so this will require some innovative thinking.

MS: According to Statistics Canada here at home we have the same problem. Our aging population will mean a decline in workers, increases in health care costs, and other challenges to our economy and standard of living, because there will not be enough workers to pay for all our social programs. How do you analyse that?
MH: We generally calculate things like the old age dependency ratio, which is defined as the number of people over the age of 65 divided by those age 15-64. Doing things like removing mandatory retirement at age 65 helps a little, but it remains an issue.

MS: Is this a problem exclusively caused by the fact that birth rate is falling below the fertility replacement rate of 2.1?
MH: Largely. We also live longer than we used to, equating to a larger share of the population that is out of its prime working years.

MS: What is the role of immigration in this scenario? Is increasing it the only way we can improve the situation?
MH: We need people from somewhere. If Canadians aren’t making them, then we have to recruit internationally. There are other approaches, but no silver bullet.

MS: What should the government do to try to solve this situation?
MH: Increasing the number of newcomers helped a lot. The other thing would be to try to create flexible working arrangements to keep people in the labour force longer. It’s a shame that so many over the age of 65 have fully withdrawn from the labour force, because they still have so much to offer!

MS: In general, how do you foresee our demographic situation in ten years from now?
MH: 10 years from now there will be little change, but 25 years from now is a different story. Most people accumulate the majority of their health care costs in their last 10 years of life. A lot of baby boomers will be in that position in 25 years.

Lizandra Ongaratto/MS

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