Canada: Structural squeeze builds in labour market – RBC

Royal Bank of Canada (RBC) economists Nathan Janzen and Annie Zheng highlight that Canada’s current high unemployment rate is masking longer-term labour supply challenges. They note retirements have surged and will stay elevated into the 2030s, while the under‑35 workforce is set to shrink without immigration. The available workforce is projected to contract relative to population by 2026, tightening labour conditions over time.

Retirements and demographics tighten supply

"A high unemployment rate means labour shortages are less of an issue for Canada right now than in the past, but under the surface longer-run structural labour supply headwinds continue to build."

"Monthly retirements have nearly doubled to roughly 25,500 per month, and will remain elevated into the 2030s."

"At the same time, the population of potential workers under 35 currently in Canada (i.e. without immigration) would decline by about 186,000 per year over the next five years."

"As a rising share of the population hits retirement age, the size of the available workforce will decline more than the population for the first time on record outside of the pandemic in 2026."

"But, challenges tied to a shrinking supply of new workers will build as per-worker labour markets conditions improve (i.e. the unemployment rate declines)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)