New research by the Fraser Institute predicts that by 2027, there will only be three working-age Canadians for every senior over the age of 65 – almost half of what there were twenty years ago.  

Report co-authors Ben Eisen and Joel Emes write that the shrinking ratio will “put pressures on public finances” in the next few years in funding cash transfers to seniors and paying for healthcare costs. 

Projections were based on Statistics Canada demographic data, with “working-aged” defined as those between the ages of 15 and 64. 

“Workers pay the bulk of taxes, which governments need to fund important services, including health care and income transfers to seniors,”  said Eisen in a press release. “As the relative number of seniors grows, and the relative number of workers declines, government finances across Canada will be put under increasing strain” 

The ratio of seniors to working-age Canadians was 7.8 in 1970, 5.4 in 2000 and 3.4 this year. Additionally, those over the age of 65 represent a bigger portion of Canada’s population. 

Seniors made up 19% of Canada’s population this year and are projected to be a quarter of the population by 2059. 

“This shrinking ratio of workers to seniors in Canada—which is already underway—is a significant headwind to policymakers in their efforts to improve the sustainability of government finances in Canada,” said Eisen. 

The implications for Canada’s economy are numerous, including a declining labour force participation rate, fewer taxpaying workers and slower growth. 

“An aging population will also put increasing pressure, to varying degrees, on a major area of expenditure for each senior level of government in Canada,”  the report explained. “For the federal government, this area is income support for seniors.” 

“The other major spending area is health care, an expense borne primarily by the provinces although notionally shared by the federal government via the Canada Health Transfer’s per-capita block grant and through small amounts of direct federal spending on health care services for small, specific populations.”

Other impacts of the declining ratio include an increase to federal and provincial spending by 2% of GDP over the next few decades, which would mean an additional $55 billion in spending, or $2,700 per worker. 

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