Aging workforce, lack of immigration threaten Atlantic region

Financial PostNovember 26, 2009



OTTAWA — All those years of watching the cream of its youth go west for better opportunities has left Atlantic Canada in a bit of a pickle, according to a report by the C.D. Howe Institute.

In a report titled Stress Test: Demographic Pressures and Policy Options in Atlantic Canada, the think-tank says it will take "courage and imaginative approaches" to ride out the storm that looms if the provinces are not able to attract enough immigration to offset the rising costs of dealing with an aging population.

While the quaint, small-town charm of the Atlantic provinces is attractive to tourists, it is less so to the region's own educated citizens and migrants from other provinces and abroad, the report suggests.

The region's population is 8.3 per cent rural, according to authors Colin Busby, William B.P. Robson and Pierre-Marcel Desjardins, compared with 2.6 per cent in most of the rest of the country outside of Manitoba and Saskatchewan. While rural areas tend to have a better hold on the people already living there, cities are far more successful at attracting fresh blood.

"The scarcity of population-attracting large urban centres in the region is a sobering fact for those hoping to address Atlantic Canada's demographic pressures through large inward flows of migrants," the report says.

"Without large future increases in output per working-age person in the Atlantic provinces, a shrinking workforce — which may be the case as soon as 2010 — will dampen future economic growth," the authors conclude. They urge an early start to preparations on many fronts — migration, education and skills training, investment and fiscal programs — to make sure the region continues to prosper.

One way to mitigate the future costs of health care would be to establish a Canada Pension Plan-style of pre-funding for health programs, the report suggests.

Governments will have to enact policies to maintain the area's standard of living, including rules to allow better labour-market participation incentives and labour-force flexibility; promote training to improve skills and literacy; improve the school system to fuel growth and better match graduates' skills to employers' needs; attract and retain new migrants in the workforce; and contain rising program costs.

One way to increase workforce participation, the report says, is to remove the regional application of EI benefits, which it says encourage workers to stay in the Atlantic region when they might have better prospects elsewhere and also leads to skills degradation in workers who are unemployed for extended periods. Another is to keep workers on the job longer, perhaps by increasing the CPP entitlements for people who retire later than 65.

Source: Canada.com