More older Islanders may make workforce less competitive, warns prof
Workforce participation rate not in steady decline on P.E.I.
There are signs the P.E.I. labour force may not shrink as quickly as in other parts of the country as the population ages — but that could come with its own challenges, says a UPEI economist.
While the workforce participation rate on P.E.I. has declined over the last decade, a slightly smaller drop than what has been seen nationally, how it got there was quite different.
Nationally the decline has been steady, while on P.E.I. the rate saw a big increase before it started to fall, according to Statistics Canada.
The Island rate was running around 68 per cent in 2009. In 2011 it started to go up, peaking at more than 70 per cent in 2013 before starting a rapid fall to below 65 per cent in the middle of 2016.
It recovered a little, and has bounced around a lot in the last couple of years — which is not unusual for P.E.I. monthly statistics — but overall has not moved much.
UPEI economics Prof. George Jia said the rise in participation was largely in the 55-plus demographic.
"Their retirement savings went through a cliff, basically, in 2008 and 2009. Some people, we estimate, almost 30 per cent of their retirement saving was gone," said Jia.
"I believe a lot of people will hold off on their retirement, or actually went back to the workplace, just to rebuild up their retirement saving a little bit."
Jia theorizes those people then left the workforce when markets recovered.
More older workers with less cash to spare
That this effect was stronger on P.E.I., said Jia, highlights some of the differences between the province's and the national workforce.
Firstly, a larger proportion of the P.E.I. workforce is made up of older people, so a change in that group creates a bigger change overall.
Secondly, retirement savings are generally lower in Atlantic Canada, leaving older workers with less wiggle room when markets crash.
This propensity for older people to work may lead to a continued trend of a slower shrinking of the workforce in P.E.I., said Jia.
"A big challenge might be to keep that portion of the labour force competitive," he said. "It's much harder for them to adapt to a changing working environment. Probably harder for them to acquire new skills and compete with the newer labour force."
Another factor to watch is that while the population in Canada continues to age, high levels of immigration are beginning to reduce the age of P.E.I.'s population.