Ahead of the Curve Social and Economic Impacts of Changing Demographics

Ahead of the Curve

Social and Economic Impacts of Changing Demographics

An overview of a project to assess social, economic and labour market impacts of demographic change in Nova Scotia and to identify appropriate policy directions

Introductory

• Growing awareness that demographic change will have a major impact on social, economic and labour market conditions in Nova Scotia in the very near future– Births have fallen dramatically since 1990, while deaths

have increased steadily so that we are now at the point, where there is no population growth due to natural increase

– Immigration is low and currently provides only a limited source of population growth

– Inter-provincial migration generally results in a net outflow to other jurisdictions

Introductory

• This awareness is reflected in a variety of policy initiatives being undertaken across government such as:– Immigration Strategy

– Strategy for Positive Ageing (to be released Nov 15)

• It has also shaped broad policy initiatives such as:– Skills Nova Scotia Framework

– Opportunities for Prosperity (Economic Growth Strategy)

– Community Development Policy Initiative

Introductory

• It is clear that the period of demographic change we are now entering will touch on almost all aspects of life in Nova Scotia

• There is a need to ensure that its implications are well understood across government and to identify the appropriate policy directions to ensure that we can respond effectively to the challenges and opportunities that lie ahead

Introductory

• The presentation today will:

– Provide a brief overview of recent demographic trends across Canada

– Assess likely patterns of demographic change in Nova Scotia

– Identify some of the key issues that we hope to address in the Demographics Research Project that we are embarking on

– Provide an overview of the work that will be undertaken

The Situation - Across Canada

Population Growth by Province

-10%

-5%

0%

5%

10%

15%

20%

CA NL PE NS NB QC ON MB SK AB BC

1990 to 1995 1995 to 2000 2000 to 2005

Source: Statistics Canada, Catalog Number 91-002-XPB, "Quarterly Demographic Statistics"

The Situation – Across Canada


Natural Increase as a Percent of Population

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%


1992-1993 1996-1997 2000-2001 2004-2005



Net Immigration as a Percent of Population

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%


1992-1993 1996-1997 2000-2001 2004-2005



Net Interprovincial Migration as a Percent of Population

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%


1992-1993 1996-1997 2000-2001 2004-2005



Components of Population Change, 2005

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%


Natural Immigration Migration NPR Residual

The Situation - Nova Scotia


Population and Population of Working AgeNova Scotia (1979 to 2029)

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1979 1984 1989 1994 1999 2004 2009 2014 2019 2024 2029

Population Population of Working Age


Main Components of Population Change - Nova Scotia

-6,000

-4,000

-2,000

-

2,000

4,000

6,000

8,000

1979-1984 1984-1989 1989-1994 1994-1999 2000-2004 2004-2009 2009-2014 2014-2019 2019-2024 2024-2029

Net Immigration Natural Increase Net Inter-provincial Migration

Population by Age, Nova ScotiaHistorical and Projected

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

0 - 4

5 - 9

10 - 14

15 - 19

20 - 24

25 -29

30 - 34

35 - 39

40 - 44

45 - 49

50 - 54

55 - 59

60 - 64

65- 69

70 - 74

75 - 79

80 - 84

85 - 89

90 +

July 1, 1984

July 1, 2004

July 1, 2024



Population TrendsHalifax and Nova Scotia Except for Halifax

200000

300000

400000

500000

600000

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Halifax Nova Scotia except Halifax

Population - Percent Distribution by Age

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

0 - 4 5 - 9 10 - 14 15 - 19 20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59 60 - 64 65 - 69 70 - 74 75 - 79 80 - 84 85 - 89 90+

Nova Scotia except Halifax Halifax Nova Scotia


The Issues

Issues: Economic Growth and Development

• Economic growth (measured by GDPr) results from:

• Population growth• Increasing labour force participation• Reducing unemployment• Increasing productivity

GDPr= P * L/P * (1-U/L) * (GDPr/E)


• Population growth (P)

• In Nova Scotia efforts to respond to demographic challenges have focused on population strategies – immigration and repatriation

• There are also significant concerns about retaining our youth population

• These are essential elements of an effective strategy to address the challenges of demographic change

• Ensuring that attractive job opportunities are available is essential to their success


• Labour Force Participation (L/P)

• An ageing population and ageing workforce suggest a decline in the labour force participation rate over time

• Growing proportion of the population is beyond age at which individuals normally retire

• Within the population of working age participation rates decline with age

• Need to consider efforts to increase participation of under-represented groups (Aboriginal, Black, Disabled)

• Efforts to increase participation of older population can also have significant impact

Participation RatesCanada and Nova Scotia

50

52

54

56

58

60

62

64

66

68

70

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004P

Nova Scotia Canada

Participation Rate, Both SexesCanada and Nova Scotia, 2003

0

10

20

30

40

50

60

70

80

90

100

15-19years

20-24years

25-29years

30-34years

35-39years

40-44years

45-49years

50-54years

55-59years

60-64years

65-69years

70 yearsand over

Canada Nova Scotia


• Unemployment Rate (U/L)

• Issues here include:

• Ensuring that economy can generate employment opportunities

• Measures to ensure that the labour market functions effectively to match up workers and jobs (reducing frictional unemployment)

• Ensuring that workers have the skills that are in demand (hence the importance of lifelong learning)


• Productivity (GDPr/L)

• Efforts to support economic development, innovation and productivity growth of greater importance

• Province’s economic development strategy (Opportunities for Prosperity) and the Premier’s Advisory Council on Innovation

• Ensuring that Nova Scotians have the necessary skills and entrepreneurial capabilities is an essential complement to these efforts

• Province’s Learning for Life strategy and the Skills Nova Scotia Framework

Issues: Labour Market Development

• Labour market issues

– Skill shortages

– Labour market adjustment

– Rising levels of retirements


• Skill shortages

• Assuming an ongoing capacity to generate employment opportunities, a slowdown, and ultimately decline, in labour force growth will push the labour market towards a situation of shortages

• The question here is how the labour market will adjust:• Wage adjustments

• In-migration and immigration

• Participation rates

• Productivity growth

• Need to understand how this will play out


• Labour market adjustment mechanisms

• Turnover in the labour market is essential mechanism by which economies adapt to changing conditions

• Older workers have relatively low turnover rates

• Is this likely to become an issue?


• Rising levels of retirements

• Employers will need to adapt to increasing retirement rates and ensure that they can maintain the skills of their workforces

• Impact will vary across industries and occupations

• Education and training system may need to adapt

Projected RetirementsNova Scotia

0

2000

4000

6000

8000

10000

12000

14000

16000

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Source: Canadian Occupational Projection System, 2005 Reference Scenario

Issues: Changing Industrial Structure

• Economy will need to adapt to significant shifts in demand

• Shifts in consumption demand consequent on an ageing population

• Changing demand for education and training• Declining number of youth• Increase need for lifelong learning opportunities to support

labour force development• Increased demand for health care• Will increasing share of resources devoted to health care

and possibly other non-tradeables, will we be able to maintain or competitiveness in external markets?

Issues: Other

• Additional issues that need to be better understood

• Impact on government fiscal balances and the capacity of government to respond to needs?

• The social and economic vitality of our rural communities

• Social change

The Project

The Project

• Being undertaken within the context of the Skills Nova Scotia Framework under the direction of the Labour Force Planning Committee (LFPC) with the approval and support of the Deputy Ministers’ Committee on Workforce Skills

The Project

• Steering committee chaired by the Department of Education• Includes representation from across the Provincial

government:– Education– Economic Development– Finance– Health– Senior Citizen’s Secretariat– Public Service Commission– Advisory Council on the Status of Women– Community Services

• Service Canada also represented

The Project

• Canmac Economics Ltd contracted to complete the project

• Canmac has extensive experience in economic analysis and modeling

• Strong multi-disciplinary team, including solid policy analysis capabilities (includes two former Deputy Ministers)

The Project

• Project is intended to:– Provide a sound understanding of the social,

economic and labour market implications of demographic change in Nova Scotia (“What does it mean for Nova Scotia?”)

– Identify critical challenges and opportunities– Assess appropriate policy options and

directions

The Project

There are three phases to the project:

1. Scenario development and impact analysis• Uses the Canmac model (includes

macroeconomic, demographic, fiscal, input-output, and labour supply/demand components)

• Incorporates alternative assumptions about the external environment

The Project

2. Identification of critical challenges and opportunities

• Based on simulations, key informant interviews and a literature review

• Also includes assessment of size and nature of required policy response

The Project

3. Identification of appropriate policy directions

• Uses a Delphi approach to judge the effectiveness of policy options

• Uses an iterative survey process with key informants to achieve consensus

The Project

Expected Completion Date: 31 March 2006

Thank You

Discussion

Ahead of the Curve Social and Economic Impacts of Changing Demographics

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