Royal Bank of Canada (RBC) economists Nathan Janzen and Annie Zheng report that while Canada currently faces a high unemployment rate, this is concealing deeper, long-term structural challenges in the labour market. The economists highlight that monthly retirements have nearly doubled to approximately 25,500 per month and are expected to remain at this elevated level into the 2030s, significantly tightening labour supply over time [1].
Additionally, the population of potential workers under 35 years old in Canada is projected to decline by about 186,000 per year over the next five years, assuming no immigration. This demographic shift means that, for the first time on record outside of the pandemic, the size of the available workforce will decrease more rapidly than the overall population by 2026 [1].
RBC notes that while labour shortages are currently less of an issue due to the high unemployment rate, the underlying trend points to mounting headwinds for labour supply. As a larger share of the population reaches retirement age, challenges associated with a shrinking pool of new workers will intensify, even as per-worker labour market conditions improve and the unemployment rate eventually declines [1].
No immediate market reactions or analyst opinions on policy responses are discussed in the article. However, the data suggests that structural labour market tightening could become a significant issue for Canada in the coming years [1].
CONCLUSION
RBC economists warn that Canada faces a looming structural squeeze in its labour market, driven by surging retirements and a shrinking under-35 workforce. While current high unemployment masks these challenges, the available workforce is projected to contract relative to the population by 2026, signaling potential long-term labour shortages.