Immigration can't keep up with retirees: C.D. Howe: 46% of ageing society could be dependent by
2050
National Post
Wed 27 Sep 2006

Page: FP5
Section: Financial Post
Byline: Jacqueline Thorpe

Source: Financial Post

Canada would have to take in 2.6 million immigrants a
year by 2020 and seven million by 2050 -- raising its population to
165.4-million -- if it wants to keep its ratio of retirees-to-workers at its
current 20%, according to a study from the C.D. Howe Institute.

The "colossal" increase in immigration required is unworkable say Yvan Guillemette and
William Robson
at C.D. Howe, arguing Canada must pursue other policies to
tackle the economic and fiscal burden of an ageing society.

"Although higher immigration can mitigate the imminent slowing down and
reversal in labour force growth, and can certainly meet specific labour-market
shortages, no conceivable amount of immigration with an age profile such as
Canada currently experiences can significantly affect the coming shift in the
ratio of older to working-age Canadians," the authors said.

Projections based on current fertility rates, immigration levels and rising
life expectancies show the ratio of those aged 65 and over to the traditional
working age (18 to 64), will start rising from the current level of 20% around
2012 as the bulk of Baby Boomers begin reaching 65.

Between 2010-2030 the old-age dependency ratio will escalate dramatically,
putting significant pressures on public finances as an older population demands
increasing health and social services from a shrinking tax pie. By 2050, the
dependency ratio is expected to hit 46%.

Joe Volpe, former federal citizenship and immigration minister and current
Liberal leadership candidate, proposed in 2005 that Canada dramatically jack up
its immigration rate to try to alleviate the burden.

In 2005, Canada admitted 262,000 immigrants, or 0.81% of the population --
not onerous but high enough to put Canada in the top quarter of OECD countries.

Mr. Volpe proposed a rise to about 1% of the population, or about 320,000 a
year -- a 45% increase over the average of the past 10 years.

But the authors found this would in no way diffuse the ticking demographic
time bomb. The dependency ratio would still hit about 40% by 2050 with the
population rising to 48.9 million.

Targeting younger immigrants -- the bulk under 30 and at least 50% under 19
-- but keeping current rates would still only stabilize the dependency ratio at
around 41% by 2030.

Another strategy would be to target younger immigrants and raise the
immigration rate to 1% of the population. This would stem the dependency ratio
at 36% in 2035 and drop it to 33% in 2050.

"But it's quite an extreme age filter and it's not something we could
probably do," Mr. Guillemette said in an interview. Canada would practically
have to target single parents with five kids, he added.

The analysts then ran scenarios to try and model what kind of immigration
would be required to keep the dependency ratio at 20%.

"The required increase is immediate and colossal," the study said.
Immigration would need to rise to 2.5% of the population by 2010, 4.4% by 2012
and 4.7% by 2020, at which point the population would reach 56.6 million and
immigration 2.6 million.

After 2020, the dynamics of reproduction and ageing among the newly arrived
immigrants reduces the required inflow to about 2% of the population in 2040 but
then it rises again, surpassing 4% of the population by 2050.

In this scenario, Canada's population would stand at 165.4 million and
immigration would be above seven million a year.

"Immigration can help labour force growth, but it cannot alter the entire age
structure of the entire population," Mr. Guillemette said.

Canada would be better off creating policies to increase the number of people
in the work force, raising the retirement age, encouraging people to save and
boosting productivity, C.D. Howe said.

Raising the retirement age to 70 over the next 20 years for example, would
keep the dependency ratio at about 20% until around 2025, at which point it
would rise gradually to stabilize at around 35% by 2050.

Edition: National
Story Type: Business; Statistics

Note: [email-masked].
Length: 651 words