Models of aging: How Japan, Denmark, Germany are riding out their senior wave

Declining fertility rates have combined with increased life expectancy to create a Canada in which there are now more seniors than children 14 and younger. How should Canada deal with the challenges that can pose? Countries with older populations offer us some suggestions.

As Canada's seniors outnumber children, it can learn from countries with older populations

Seniors now outnumber children younger than 15 in Canada, according to statistics released Tuesday. Canada is far from the oldest country, however, and can learn from its elders about how to support a greying population. (YouTube)

Declining fertility rates have combined with increased life expectancy to create a Canada in which there are more seniors than children 14 and younger.

And projections released by Statistics Canada Tuesday show that gap will only increase over the next 40 years, leading to slower economic growth and a growing demand for social support, demographics expert David Foot says.

Policy-makers could consider Tuesday's news a wake-up call, although the University of Toronto economics professor said these trends have been ignored for decades.

"With that massive baby boom generation now entering their late 60s, inevitably, they're going to start" to retire, Foot said.  "We're going to have slower workforce growth — and that will affect the economy."

Still, Canada remains the second-youngest of the G7 countries, meaning that there's time to learn from the policy successes and failures of these other nations. 

The oldest country: Japan

More than a quarter of Japan's citizens are at least 65, making it the world's fastest aging country. In Canada, about 16.1 per cent of us are seniors.

Right now in Japan, there's a higher demand for adult diapers than children's diapers, economist Michael Moffatt says, a "stunning statistic" that illustrates one of the main reasons why the country's economy has been treading water for the better part of two decades.

"They haven't been able to find a way to get their economy to grow in a significant way while still being able to support an older population," the Richard Ivey School of Business professor said.

Declining fertility rates mean that seniors may have fewer family members to care for them and will rely more on government support, economists say. (Shutterstock)

Japan's GDP has grown at an average rate of 1.3 per cent for the past 25 years, according to the World Bank, dropping from averages of more than five per cent annual growth in earlier decades. 

Some of that sluggishness has been attributed to a shrinking labour market. Although Japan has offered incentives to encourage women to work, they are traditionally expected to stay home and care for aging relatives.

"So that also slows down the amount that working-age people are able to work," Moffatt said.  "And it's one of the ways that the problem gets compounded."

Japan also has a mandatory retirement age of 61. That's the minimum age at which someone qualifies for a pension. That retirement age will increase by four months every year until it hits age 65 in 2025. It's hoped that will encourage people to stay in the workforce longer and reduce public pension costs.

Canada has made a similar move — gradually boosting the age when one can draw Old Age Security from 65 to 67 by 2029.

Two countries to watch: Sweden and Denmark

Sweden and Denmark are the "places we need to turn to," Foot said, in crafting economic and health policy to manage the shift in demographics. While the countries take different approaches, they all focus on health care, offering programs akin to pharmacare or following up with seniors in their homes after a visit to the hospital. 

And while Sweden's residents are not collectively older than Japan's, about a quarter of the country's 9.5 million residents are at least 60, according to Global Age Watch. 

The public purse covers most home-care and long-term care in both Sweden and Denmark.

Sweden and Denmark are examples Canada should look to as its population continues to age, demographics expert David Foot says. (iStock)

Unsurprisingly, they are among the highest taxed countries in the European Union, according to Eurostat. In 2013, Sweden topped the list, while in 2014 it was Denmark.

Policy-makers in Canada will have to make similar choices when it comes to taxes, Foot said, arguing more tax revenue will be needed, although there may be alternative ways of collecting it. 

Foot said Ottawa and the provinces could look at taxing different sources, like foreign exchange or stock market transactions. 

"If the state or government doesn't step in, we'll see poverty rise amongst our senior population," he said. "We'll go back to the days when poverty rates in that population were upwards of 30 per cent." 

Immigration, the fountain of youth: Germany

Germany's population remains older than Canada's, although Foot said that the former has followed our example and tried to stave off the aging process by accepting more immigrants.

"Immigrants tend to be in their 20s and early 30s – that's when you're most mobile in your life," Foot said. 

Still, Foot said accepting young immigrants will only have a mild effect on demographics, because new immigrants made up less than one per cent of Canada's population over the last year. 

Canadian employers can, however, look to Germany's skills training programs when trying to prepare younger workers, Moffatt said. Firms there routinely have employees transition into retirement, working part-time in order to mentor their successors, he said.

"I think that's going to be an important thing for any country to do — making sure that our young workers have all the skills they need so that as the baby boomers retire, there are many people qualified to fill those jobs."


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