Canada is headed toward a tighter labour market within a few years. (Credit: AP Photo/Matt Rourke, File)
Get ready for a game changer.
Over the next five years, the last and largest group of baby boomers will turn 65, bringing on the biggest retirement wave Canada has seen yet, according to a new report from Royal Bank of Canada.
For the past 15 years since the first boomers turned 65, an estimated 5.2 million people have left the workforce. Within the next few years, 2.7 million more Canadians, now between the ages of 60 and 64, are likely to join them. (Baby boomers were born between 1946 and 1964.)
“With unemployment rising in the last three years, it can be easy to forget that the largest (and final) baby boomer cohort is about to reach official retirement age,” wrote RBC assistant chief economist Cynthia Leach.
“… Canada needs to accept that, viewed from the supply side, it’s headed toward an even structurally tighter labour market within a few years.”
Nor will immigration help stall this aging of the workforce, now that the federal government has clamped down on the number of newcomers.
Yesterday, Statistics Canada reported that the country’s population growth hasn’t been this slow since the pandemic lockdown (see chart below), and RBC expects near-zero growth in 2026 and 2027 under the government’s “drastically lower targets.”
Even if immigration numbers return to a more normal rate after that, RBC estimates labour force participation will decline by more than two percentage points between 2024 and 2030.
“This would exceed the drop of the prior 14 years — meaning Canada will face the peak impact of boomers on the labour force,” said Leach.
So what does this mean to the economy?
Some industries and regions will be hit harder by labour supply pressures than others. Nine of 21 sectors have more than a quarter of employees now over 55, a share that tops the overall average of 21 per cent. In fishing and agriculture, the percentage of workers over 55 rises to 40 per cent.
Regionally, British Columbia, Quebec and the Atlantic provinces have a higher share of older people.
As people age annual health care costs to the state rise, from about $3,400 at age 40 to $10,000 at 70 and more than $36,000 at 90, said RBC.
So far, it estimates Canada has only seen about 11 per cent of the additional health care costs of the aging baby boomers — with the lion’s share to come.
“Canada’s rising seniors’ dependency ratio — the mirror of the falling participation rate — means there are relatively fewer workers to shoulder this burden,” said Leach.
There are ways to bolster the workforce domestically such as training, better labour mobility and recruiting from demographic groups with lower participation rates, she said.
But the biggest gains could be achieved by increasing productivity and capital intensity in the overall economy.
Difficult in the current environment of trade turmoil, but Leach stressed that Canada should not be lulled into complacency by the weak jobs market of the past few years.
“Structurally tighter labour markets are coming and measures to address it will have benefits that outlive the last of the boomer wave,” she wrote.
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Canada’s population growth hasn’t been this slow since the country went into lockdown in the first year of the pandemic.
Statistics Canada reported Wednesday that growth in the second quarter was the lowest outside of 2020 since records began in 1946. The population gained 47,098 people, or 0.1%, compared with quarterly growth of almost 1 per cent last year.
Reduction of the temporary resident population appears to be going to government plan. The number of non-permanent residents dropped for the third quarter in a row and now make up 7.3 per cent of the country’s total population, compared with 7.6 per cent at its peak in 2024.
With the drop-off in immigrants, who are on average younger, Canada’s population has begun to age again, with the average age rising to 41.8 years.
In Canada, almost one in five people were aged 65 and older on July 1, 2025, but in Newfoundland and Labrador it’s one in four — the first time that has happened in any Canadian province or territory.
Joel Lightbound, minister responsible for Canada Post, will provide details in Ottawa on new measures to address the challenges facing the postal service and advance its transformation.
Today’s Data: United States GDP, durable goods and existing home sales
Earnings: BlackBerry Ltd., Costco Wholesale Corp., CarMax Inc., Accenture PLC
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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.
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