New data shows 50% jump in retirements — a trend that’s making the labour shortage even worse

Think there's a labour shortage now? Just stick around.

The number of Canadians who retired jumped almost 50 per cent in the last year, according to recent data from Statistics Canada. And economists warn it's a trend that isn't likely to slow down.

The youngest baby boomers are the biggest demographic cohort and they're starting to get to retirement age," said Pedro Antunes, chief economist at the Conference Board of Canada.

Friday, Statistics Canada released data showing that as of August a record-high 307,000 Canadians had retired over the previous 12 months, up from 233,000 a year earlier. That flood could well continue: Statistics Canada also reported that, in August, 11.9 cent of permanent employees were planning to leave their jobs within the next 12 months, 5.5 percentage points higher than in January.

Some of the bump in retirement numbers came because Canadians decided it wasn't worth the bother to call it quits during a pandemic, Antunes argued.

Why retire if you can't go anywhere or do anything?" Antunes said, referring to COVID-related travel restrictions and lockdowns, which have happened on and off since March 2020.

But even before the global COVID-19 pandemic, Antunes noted, the trend was already there; between August 2019 and August 2020, 273,000 Canadians retired.

This is something that was happening well before COVID. COVID just put it off for a bit," said Antunes.

Robert Kavcic, senior economist at BMO, agreed that some people clearly held off on retirement during the pandemic. But in a research note, Kavcic stressed that Canada's demographics mean that higher retirement numbers are likely here for the foreseeable future.

A major demographic drain on the labour force has been working away in the background with almost 5 million Canadians now in the 60-to-69 age group where participation dramatically falls off," Kavcic wrote.

David Macdonald, chief economist at the Canadian Centre for Policy Alternatives, argued that the flood of retirements can't be explained strictly by demographics or a COVID delay. Some of it is complete burnout and stress in people who might have otherwise kept working, or at least considered it.

I think this was largely a COVID issue. Look at the jobs which were the biggest source of retirements. Teachers and nursing were right up there," said Macdonald.

No matter what the causes of the large retirement numbers, it's clear that strong immigration is vital to keep the Canadian economy growing, said Macdonald.

There's no way we can have the labour force we've had in the past without getting help from immigration. It's an absolutely critical part of the picture. Our birth rate is just too low," he said.

Antunes, who called immigration fundamental" to a healthy, growing economy, said even if the Canadian birth rate increased overnight it's clearly not an answer to the current labour shortage.

Having more babies is a solution if you don't mind waiting 18 years," said Antunes, who suggested that the shortage is already having an impact on the Canadian economy.

Preliminary data from Statistics Canada showed that the economy shrank slightly in July. The biggest issue, Antunes argued, isn't a slump in demand, the more traditional cause of economic slowdowns.

We're running up against capacity constraints. That's a lot different than a slowdown because demand is falling," Antunes said. Economic growth comes from investment and from having a growing, productive workforce."

In the first quarter of 2022, the unemployment-to-job vacancy ration - a key measure of labour market tightness - was a record-low 1.4. In the first quarter of pre-pandemic 2019, the measure was 2.4.

Josh Rubin is a Toronto-based business reporter. Follow him on Twitter: @starbeer