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Section 10: Projections

Projection of population trends in Canada, 2006-2056

In order to determine the future trends in demographic changes in Canada, Statistics Canada estimates six sets of population growth scenarios for Canada, the provinces and territories. These scenarios take into account current demographic trends with respect to the components of population growth like fertility, migration and mortality.

For each component of population growth, one or more assumptions were made regarding how that component would evolve in the future. These assumptions, when combined, form a number of projection scenarios. In all, there are three assumptions each on fertility, mortality and immigration and four assumptions on inter-provincial migration; in combination, these assumptions generate 108 scenarios on the future course of population change. In this document, only four scenarios will be looked at. 1. Low growth. 2. Medium growth which includes recent migration trends, projection 3: Medium-growth which includes medium migration trends, and projection 6: High growth. For more in-depth analysis of each growth scenario’s inputs, please consult Population Projections for Canada, Provinces and Territories, catalogue no. 91-520-X. The evolution of the working age population and population dependency ratios will be examined with respect to these projections.

The working age population

A low birth rate and aging of the population, which will accelerate in the years ahead, present many challenges for Canada. One of the most significant and pressing challenges involves the labour force. With the aging of the boomer generation, the absolute number as well as the proportion of older workers in the work force has risen sharply in recent years.

In 2006, there were 22.6 million (70% of total population) people aged 15 to 64 years (chart 10.1). Since people in this population group represent the source of labour supply, the number of people in this age range is important. Various population projection scenarios have different projections about the direction of the growth of this sub population group.

According to the low-growth scenario, the working age population would increase and peak at 23.7 million in 2017. The number of people in this group will then decline and reach 21.1 million in 2056, a lower figure than in 2006 (table 10.1-1). The medium-growth scenarios postulates that this sub population group would increase gradually and reach 24.2 million in 2021 before slightly declining between 2022 and 2029 as the largest baby-boom cohorts (individuals born around 1960) exit this group. The working population would begin to grow again, and reach a peak of 25.2 million in 2054 (tables 10.1-2 and 10.1-3).

Similarly, in the high-growth scenario (6), the working age population increases steadily throughout the projection period but the impact of the exit of the baby-boom cohorts will temper its growth and the total number of people in the working age population will reach a maximum of 29.6 million in 2056 (table 10.1-4).

In all the projection scenarios, the proportion represented by the working age population would gradually decline during the 2010s and 2020s, amounting to approximately 62% of the total population by the early 2030s (tables 10.1-1, 10.1-2, 10.1-3, 10.1-4 and chart 10.2). It would then stabilize at a level close to 60%. The lack of differences from one scenario to another may be explained by the combination of fertility and immigration assumptions that evolve in the same direction. Scenario 1, for example, combines low fertility (which has the effect of reducing the number of children) with low immigration (which mainly limits the number of persons aged 15 to 64 years). 1 

Chart 10.1 The Working Age population (those aged 15-64 years) as a proportion of total population, Canada, selected years between 2006 to 2056 
Source(s):  Statistics Canada. Population Projections for Canada, Provinces and territories. Catalogue no. 91-520-X.

A rising demographic dependency ratio

Demographic dependency ratio is the ratio of the population outside the working-age population, i.e. persons under 15 or 65 years and over, to the working-age population (15 to 64 years).

In all the population projection scenarios, the number of children aged 0 to 14 years and elderly persons aged 65 years and over would increase more rapidly than the population of people 15-64, between 2011 and 2031 (table 10.2). This is primarily the result of lower fertility rate in Canada and population aging. There were approximately 44 children and elderly people per 100 working age persons in 2006; all of the population projection scenarios project that this ratio would be approximately 61 per 100 in 2031 and about 69 per 100 in 2056 (table 10.2).

Federal budgetary projections and debt

Federal budgetary revenues are expected to increase to $243.5 billion for the 2008-2009 fiscal year. This represents a +$6.8 billion (+2.9%) increase over the projected revenues in the previous fiscal year and is a $21.3 billion (+9.6%) increase over figures recorded for the 2005 to 2006 fiscal year (table 10.4).

Similarly, total expenses are expected to increase at almost the same rate, from a projected $233.4 billion in 2007/2008 to $240.5 billion (+3.0%) in the 2008/2009 fiscal year. This growth rate is less than half the +6.7% rise in total expenditures recorded from 2005/2006 fiscal year to 2006/2007 fiscal year. The figures for 2008-2009 represent a +15.1% increase over the figures from the 2005 to 2006 fiscal year ($209 billion) (table 10.4). It is projected that in the fiscal year (2008-2009) the budget surplus of $3 billion will be directed towards reducing the federal debt. This is expected to lower the country’s debt-to-GDP ratio to 29.7%, down from 31.4% in the 2007 to 2008 fiscal year and 35.1% in 2005 to 2006 year (table 10.4).

Chart 10.2 Projected demographic dependency ratio using population projection scenarios 1, 2, 3, and 6, 2006 to 2056
Source(s):  Statistics Canada. Population Projections for Canada, Provinces and territories. Catalogue no. 91-520-X.