Aging dilemma

Globe & Mail – Editorial – September 28, 2006

While immigration brings much to the nation, it cannot turn back the clock on an aging population. In a report on population trends, the C.D. Howe Institute drives home that assertion through scenarios that juggle immigrant numbers and ages. The results are startling: Even if Canada admits only young parents with young children over the next few decades, elderly Canadians will inevitably constitute a larger proportion of the population, compared to working-age adults. Immigration by itself can do little to fix the financial and other burdens posed by an aging population, the report warns.

Immigration is not a magic bullet. Statistics Canada reported yesterday that immigration was at a near-record high of more than 254,000 in 2005-2006. But the C.D. Howe study says that even if immigration levels increase to 1 per cent of the population, or 320,000 people a year, and even if Canada focuses almost exclusively on the admission of parents in their 20s with young children, the ratio of elderly people to working-age adults would still rise dramatically by 2035, almost doubling.

To stabilize the current ratio without changing the current age mix of immigrants, Canada would have to push its population to 165 million by 2050. If the nation opted for newcomers between the ages of 20 and 24, it would still have to admit 1.2 million of them annually between 2012 and 2030. No society could tolerate the disruptions and the costs.

The aging population is a fact of life. Even under its medium population-growth scenario, Statistics Canada says deaths will exceed births by 2030; immigration will provide the only growth. What should Canada do? The C.D. Howe report looks at a scheme to eventually raise the retirement age to 70 from 65, by pushing it back one year every four years, starting in 2008 and stopping in 2024. Even that modest change does more to increase the number of working-age adults than extreme changes in immigration policy.

Such results should put politicians on alert. Immigration is a tool of limited use. They should also reduce incentives to retire early, improve productivity so fewer workers can produce more with better processes, and encourage more Canadians to enter the labour force. They should also examine ways to encourage women to have more children. The solution, like the problem, is complicated.