Summary of the Nova Scotia

Demographic Research Report:

A Demographic Analysis
of Nova Scotia into
1_SummaryReport_Dem 5/3/07 2:16 pm Page a
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1 Where We Are . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Profile: Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Profile: Labour Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3 Profile: Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 Profile: Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5 Profile: Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2 Where Are We Going? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Base Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Alternative scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3 What Should We Do? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Increasing Participation Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.3 Migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.4 Fiscal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.5 Regional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Charts
Chart 1: Nova Scotia, Births, Deaths and Natural Increase, 1971-2005 . . . . . . . . . . . . . . . . . . . 2
Chart 2: Nova Scotia, Net Interprovincial Flows, 1971-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Chart 3: Nova Scotia, Age/Sex Population Pyramid, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chart 4: Nova Scotia Labour Force (15-65) Age Population Projections,
Base Reference Case and Statistics Canada Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Chart 5: Graphic Illustration, Nova Scotia Labour Force (15-65) Age Population
Projections, Base Reference Case and Statistics Canada Scenarios . . . . . . . . . . . . . . . . 10
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Introduction
D
emographics, defined as the physical characteristics of a population such as age, gender,
education, family size and location, has an important impact on society, and by extension,
have an important impact on government policy which seeks to achieve broad societal goals.
For planning purposes, it is necessary to understand both the demographic characteristics of today
as well as characteristics of the future population.
It is well established that Nova Scotia has a decreasing rate of population growth and that its population
is older than the Canadian average. The question is how do those and other demographic factors impact
Nova Scotia. A project was undertaken within the context of the Skills Nova Scotia framework and
supported by the Deputy Ministers Committee on Workforce Skills to identify the demographic changes
that will take place over the next 20 years. The project was to assess the impact of demographic change
on Nova Scotia society, economy and the labour market, and identify policy options to deal with these
challenges and opportunities. As a reflection of the widespread interest in the impact of demographics on
the business of government, the Steering Committee for this project consisted of members from several
different provincial government departments and agencies as well as Service Canada. The outcome of this
project was The Nova Scotia Demographics Research Report: A Demographics Analysis of Nova Scotia into
2026 produced by Canmac Economics Ltd and associated subcontractors.
This paper seeks to condense the Report in an effort to make it more accessible. It will follow the basic
framework of the Report: Where We Are; Where Are We Going; and What Should We Do?
The section Where We Are has been updated from the original document to reflect the latest Statistics
Canada releases.
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026 :
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1 Where We Are
In order to properly understand what the future demographic changes might be, it is necessary to
understand where we are now and key trends that got us here.
1.1 Profile: Population
According to Statistics Canada, the July 1, 2006 population estimate of Nova Scotias population was
934,405 (a 0.2 per cent decline from the previous July). Nova Scotias population growth has been
slowing, and in four of the last ten years, population was lower than the previous July 1 estimate.
Population estimates are based on census information adjusted by data collected in the time period
between each census: recorded births (+); deaths (-); immigration (+); emigration (-); non permanent
residents (+/-); and net interprovincial migration (+/-). Some data sources are more complete than others.
Often it is necessary for Statistics Canada to adjust past population estimates (residual deviation
1
) after
each census.
Births minus deaths are known as natural increase. As illustrated by Chart 1, natural increase has
declined sharply since the beginning of the 1990s to 171 people in 2005-06. Much of the decrease stems
from the decline in the number of
births since the group of women
of childbearing age (15-49) is no
longer large enough to mask the
decrease in total fertility rate
(TFR), the number of children per
women aged 15-49. Nova Scotias
TFR decreased from 1.85 in 1976
to 1.36 in 2001 and has since
increased to 1.4 in 2004. It is
uncertain if this increase will be
maintained or if the census
information will readjust the
number. Replacement rate for
a population is 2.1. Despite the
increase in life expectancy, the
number of deaths has increased
as Nova Scotias population ages.
: Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026
Chart 1: Nova Scotia, Births, Deaths and Natural Increase, 1971-2005
1
Residual deviation is an adjustment made to past population estimates between censuses to reflect the population estimate of the latest
census including adjustment for net undercoverage.
15,000
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Natural Increase Deaths Births
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Source: Statistics Canada, Annual Population Estimates
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Immigration outpaces emigration so that the net international migration flows have remained positive.
In the last 15 years, net international migration has ranged from a low of 553 in 1993-94 to a high of
1,098 in 2000-01. Contribution to population growth by the non-permanent residents (NPRs) varies,
influenced in large part by economic conditions. In the last 15 years, the contribution of NPRs to
population growth has ranged from -414 in 1999-2000 to 1,525 in 2001-02.
The most volatile element of
population growth is net
interprovincial migration.
Interprovincial flows in and out of
the province which range from
15,000-20,000 each way over the
past five years far outpace other
population flows. Chart 2 illustrates
this volatility while showing that net
flows have generally been negative
since the early 1990s. These flows
are both difficult to predict and to
estimate. Statistics Canada uses
child tax benefit information
updated by taxfiler data for its
estimates.
In terms of net interprovincial
population flows, the population
losses are found in the younger
population. For 11 of the last
15 years when net interprovincial migration has been negative, it has been negative for 12 years for the
0-14 age group; 14 years for the 15-19 age group; and it always been negative for the 20-29 age group.
Results were mixed for the 30-44 age group (8 years of net losses), becoming more positive for the 45-54
(13 years of net gains) and there have always been net gains for the 55 and older population. Population
flows have been strongly influenced by Albertas demand for labour over the last several of years and this
has resulted in the negative flows in the 30-54 age group.
These population movements along with intraprovincial migration have meant that there have been
population shifts within Nova Scotia. Nova Scotia has followed the worldwide trend towards increased
urbanization with the Halifax Regional Municipality having the strongest growth (8.3 per cent
between 1996-2005). Counties within a 90-minute commute to downtown Halifax have shown
stable or slight population growth. Eleven counties have experienced declines ranging from
1.7 per cent in Yarmouth County, to 17.2 per cent in Guysborough County.
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026 ,
Chart 2: Nova Scotia, Net Interprovincial Flows, 1971-2005
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Net Interprovincial Migration Linear Trend
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Source: Statistics Canada, Annual Population Estimates
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An important component of
demographics is the age structure
of the population. Chart 3
provides an illustration of the age
structure of the population by year
until age 90 when the remainder is
grouped together. The chart
highlights the most influential
event in demographics of the past
century, the baby boom. The baby
boom marked an increase in
fertility following World War II.
Statistics Canada has defined it as
the population born between
1946 and 1965, the 41-60 age
group on this chart.
The effect of the ageing of the
baby boom, the lower fertility
rates and the net out-migration
of the young has exacerbated
the ageing of Nova Scotias
population. The median age
(exactly half the population is
younger and half is older) for
Nova Scotias July 1, 2006
population increased 2.5 years
from 2001 to 41.0 years, the
second-highest in Canada. Among
the provinces, Alberta has the
lowest median age at 35.5 years
but Nunavut is lower still at 23.2 years. For Nova Scotia in 2006, 22.5 per cent of the population is aged
0-19; 62.9 per cent is aged 20-64; and 14.6 per cent is aged 65 and older.
The 2001 Census provides a further profile of the population. Females comprised 51.6 per cent of the
population while males comprised 48.4 per cent. As an indication of migration, approximately 4.6 per
cent of our population in 2001 were immigrants while another 16.6 per cent of our population were
Canadians born in another province or territory.
In the 2001 Census, 34,524 individuals identified themselves as a visible minority (Aboriginal population
not included), which is just under four per cent of Nova Scotias population. At approximately 57 per
cent, the largest visible minority group is African Nova Scotians (identified as Black in the Census). They
form 2.2 per cent of the provincial population. The population growth of African Nova Scotians between
the 1996 and 2002 censuses (8.6 per cent) helps explain the younger population profile.
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026
Chart 3: Nova Scotia, Age/Sex Population Pyramid, 2006
90+
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Female Male
a
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persons
Source: Statistics Canada, Annual Population Estimates
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In the 2001 Census, 17,010 or approximately two per cent of Nova Scotians identified themselves as
Aboriginal, identifying with at least one Aboriginal group (North American Indian, Metis or Inuit) and/or
reported being a Treaty Indian or a Registered Indian as defined by the Indian Act of Canada and/or
reported they were members of an Indian Band or First Nation. There was 37 per cent growth in this
population from the previous census but some of this increase reflects an increase in the number of people
choosing to identify themselves as Aboriginal. The Aboriginal population is much younger than the
general population. In 2001 approximately 50 per cent were under 25 years of age as compared to 31 per
cent for the general population in 2001.
In 2001, 152,210 persons (approximately 17 per cent of Nova Scotians) lived with some form of disability
according to the Participation and Activity Limitation Survey (PALS). This is the highest per cent of any
province and is higher than the national average of 12.4 per cent. This higher rate is related to age of the
population because so many disabilities are age-related and occur among seniors.
1.2 Profile: Labour Market
Demographics has a significant impact on the labour market. Before examining the labour market it
would be useful to have an understanding of some of the key terms. The source population for the labour
force is defined as population 15 and older. The labour force is defined as the population 15 and older
who are either employed (employed) or actively seeking employment (unemployed). More limiting
definitions of labour force are also used such as working age labour force, people 15 to 64 who are either
working or looking for work. Statistics Canadas Labour Force Survey, from which most labour force
statistics are drawn, eliminates people in the territories, full-time members of the Canadian Armed Forces,
residents of institutions (i.e., prison, long-term care) and people living on reserves.
There are three commonly-used ratios which are expressed in percentage terms: participation rate is the
ratio of labour force to source population; unemployment rate is the ratio of those who are unemployed
to labour force; and employment rate is the ratio of employed to labour force.
Participation rates in Nova Scotia are below Canadian rates (63.6 per cent versus 67.2 per cent). There
is a gender difference in the rates, with participation rates for females (58.9 per cent in 2005) being below
male participation rates (68.6 per cent). In the past, overall participation rates have grown with the
increasing participation of women. In the future, the participation rate will be increasingly affected by the
ageing of the population as the people leaving the labour force through retirement will not be replaced in
the same numbers by new entrants, but the retirees remain in the source population until death, putting
downward pressure on the participation rate.
There is a considerable gap in 2005 participation rates across the Province ranging from 55.1 per cent in
Cape Breton to 69.2 per cent in Halifax Regional Municipality. Data indicate that regions with higher
employment rates have higher participation rates.
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026 ,
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1.3 Profile: Other
In 2003, an International Adult Literacy and Skills Survey was done in Nova Scotia testing Nova Scotians
16 and older in prose literacy, document literacy, numeracy and problem-solving. The population was
categorized into five levels, with one being the lowest. The Organisation for Economic Co-operation
and Development (OECD) has indicated that level three is the minimum threshold for working in
a knowledge-based economy. That threshold was met by approximately 55 per cent of Nova Scotians for
prose literacy, 53 per cent for document literacy, 44 per cent for numerical literacy and 26 per cent in
problem solving.
1.4 Profile: Economy
In terms of future projections, a solid understanding of the economy is crucial. Nova Scotia is a small
open economy. In non-technical terms there are not enough of us to provide a large enough market for
efficient production. We need to export our goods and services to achieve economies of scale and to bring
wealth into our province. Despite the goods-producing sector providing the larger share of exports,
Nova Scotia is a service-based economy. In terms of Gross Domestic Product (GDP), services comprise
approximately 77 per cent of the Nova Scotia economy in terms of output. The largest sectors are:
Finance & Insurance, Real Estate & Renting & Leasing & Management of Companies
2
; Public
Administration; Manufacturing; and Health Care & Social Assistance. The service sector accounts for
79.4 per cent of Nova Scotia employment (military not counted). The largest sectors by employment are:
retail trade; health care & social assistance; manufacturing; and educational services.
1.5 Profile: Government
Government has recognized and is beginning to respond to demographic factors. Demographics form
parts of overarching government policy in Opportunities to Sustainable Prosperity, Community Development
Policy and The Skills Nova Scotia Framework. It is highlighted in The Strategy for Positive Aging released by
the Senior Citizens Secretariat and in the creation of the Office of Immigration. Individual departments
such as Health, Health Promotion and Protection and Education are aware of the challenges it presents
for their departments and have been working to deal with them. Beyond the societal implications
affecting the business of government, government also realizes that it will face an ageing workforce and
a tightening labour market.
o Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026
2
This include a substantial component of inputed rent - a monetary value placed on the rental value of owner-occupied dwelling.
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Demographic changes will also affect fiscal policy. Over time, Nova Scotia has become more reliant on its
own source revenues. In 1981-1982 federal transfer payments provided 46.7 per cent of Nova Scotia
revenues. In 2005-06 according to Public Accounts, federal transfer payments were 36.2 per cent. Of the
63.8 per cent of provincial own source revenue in 2005-06, the largest component was personal income
tax at 39.2 per cent, followed by Harmonized Sales Tax (HST) at 26.4 per cent and corporate income tax
at 9.0 per cent.
On the expenditure side, the three largest expenditures by function are: health; education; and debt
serving but there have been some share changes. Comparing the finalized 1989-1990 numbers with the
forecast 2005-06 functional expenditures show that health has grown from 27.7 per cent of expenditures
to 39.8 per cent, while education has dropped from 23.2 per cent to 19.4 per cent and debt servicing
charges declined from 16.3 per cent to 14.2 per cent.
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026 ;
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2 Where Are We Going?
2.1 Base Case
Canmac developed a base case with alternative scenarios using its demographic-econometric model.
For the base case the following assumptions were used:
Zero net migration (international and interprovincial);
Age-specific fertility and births rates for 2003-2004 would remain constant throughout the period;
Nova Scotia productivity growth will average 1.0 per cent annually;
the Canadian and American economies will grow an average of 2.5 per cent annually; and
Government and business will not take a strong policy response that would affect this base case.
The assumption of zero net migration was deemed reasonable by the Steering Committee. During the
1990s when Statistics Canadas residual deviations were applied to net migration, they helped to wipe
out any gain from net migration. The implication of this assumption is that Nova Scotia is dependent
on natural increase for population growth.
Canmac makes the point that even if the fertility rates increase, the effect on the labour force will be
minimal as most of the people in the labour force of 2026 have already been born.
The continuation of the historical trends for productivity and economic growth does not mean that the
economy will not have challenges or undergo structural change. The rise of the Indian and Chinese
economies will provide both challenges and opportunities to Nova Scotia. It is assumed that Nova Scotia
will continue its transformation to a knowledge-based economy, recognizing that the reliance on natural
resources industries will not provide sustainable growth in the future.
The results from the base case are:
Population decline. Between 2001 and 2026 total population will decrease 4.0 per cent, to 894,777
in 2026.
Population ageing. The senior population will grow by 70.8 per cent between 2001 and 2026 to
217,877 forming 24.3 per cent share of the population. The primary and secondary school age
(ages 5-18) population will decline 31.4 per cent to comprise 12.9 per cent of the 2026 population.
The post-secondary age (ages 19-24) population will decline 29.8 per cent to 51,207 or 5.7 per
cent of the population.
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026
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Labour force shrinkage. The Canmac model projects that the labour force would reach its peak in
2008 and then continue to decline throughout the period. This decline is a function of the 12.6 per
cent decrease in the population of working age (15-64) from 2001 to 2006. Its 2026 population
share is projected to be 62.3 per cent. Although participation rates of certain gender and age groups
are projected to increase, the overall participation rate estimated by the model begins to decline in
2006, largely a function of age structure and the decline in working age population.
Transitional period ending in 2016. The model results of a 1.8 per cent compounded annual growth
in GDP from 2003 to 2016 increase employment, resulting in an unemployment rate of 2.2 per
cent (below the natural rate of unemployment).
3
According to economic theory, unemployment
below this rate puts an upward pressure on wages. The model would suggest that Nova Scotia runs
completely out of available labour supply in 2018. Realistically, it means that the business as
usual way of doing things is not an option. The long established policy of finding jobs for people
will need to become finding people for jobs.
2.2 Alternative scenarios
Statistics Canadas projections
The Canmac paper presented Scenarios One to Six of Statistics Canada population projection scenarios.
In 2026, the Statistics Canadas population projections ranged from 944,700 to 1,010,800, all above the
894,780 of Canmacs base case. This was largely a function of migration assumptions except Scenario Sixs
higher assumed fertility rate also swelled growth. However, the migration assumption served to increase
the 65 and older population, meaning that all population projections show a similar pattern of decline in
the working age population (15-65) after 2011.
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026 ,
3
The natural rate of unemployment is unemployment related to frictional (people moving between jobs) and structural causes
(e.g., people not living in an areas where there are jobs available or not having the right skills for available jobs). Conversely, it can
be referred to as full-employment.
Chart 4: Nova Scotia Working (15-64) Age Population Projections Base Reference Case and Statistics Canada Scenarios
Canmac Statistics Statistics Statistics Statistics Statistics Statistics
Economics Canada Canada Canada Canada Canada Canada
Year Reference Case Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6
2006 654.06 655.3 654.4 655.4 655.8 654.8 655.4
2011 651.18 658.2 654.7 659.5 663.3 657.1 660.5
2016 627.49 641.8 636.3 645.4 652.5 640.4 648.7
2021 595.60 619.1 611.7 625.5 636.4 617.6 631.7
2026 558.06 589.2 583.5 601.4 615.9 590.5 613.1
Source: Canmac Economics Ltd., Statistics Canada (2005c)
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Economic adaption scenarios
Canmac developed three
alternative scenarios on how the
economy adjusts to the tightening
labour market as a situation where
labour demand exceeds labour
supply is not feasible.
Scenario 1 - Low Growth Scenario.
The assumptions of 1.0 per cent
productivity growth and no policy
reactions by stakeholders are
maintained. As labour supply
tightens, wages will increase as
employers compete for labour.
This will result in the Province
becoming less price competitive
in its products. With an open
economy like Nova Scotias,
market share will be lost in both
its domestic and export markets. The economy will contract, labour demand will shrink and the real wage
rates will move to their original levels. According to Canmac, under this scenario, average annual GDP
growth from 2011to 2026 is 0.5 percent, less than the historical rate of 2.0 per cent. Unemployment rates
will continue to fall as employment shrinkage is outpaced by labour force decline.
Scenario 2 - Modest Policy Success Scenario. Policy changes result in productivity increases rising to 1.25 per
cent, a positive net migration of 2,500 annually and by 2016, the participation rate is approximately four
percentage points above Scenario One's 2016 rate and this gap is maintained. However, none of these
policy changes begin to happen until after 2011. Employment growth continues throughout the period.
Labour force which had been shrinking starts to grow after 2011 then begins to shrink sometimes after
2016. The Canmac model indicates that the economy grows on average 1.6 per cent annually in the 2011
to 2026 period but with unemployment rates staying above 3.0 per cent until 2024. Canmac suggests that
the Alberta experience would indicate that 3 per cent is the natural rate of unemployment.
4
Scenario 3 - Highly successful policy scenario. Policy changes result in productivity growth increasing to
1.5 per cent annually, annual net migration of 3,500 and by 2016, the participation rate is 6.1 percentage
points above Scenario One's 2016 rate, and this gap is maintained. Again, policy results are not seen until
after 2011. Employment growth continues throughout the period. Labour force does show some growth
after 2011 but begins to shrink sometime after 2016. Nova Scotia can achieve 2.0 per cent annual growth
in the 2011 to 2026 period determined by export demand. Unemployment rates remain above 5.0 per
cent until 2025.
:c Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026
Chart 5: Graphic Illustration, Nova Scotia Working (15-64) Age Population
Projections, Base Reference Case and Statistics Canada Scenarios
4
It could be argued that given structural factors in the Nova Scotia economy, that the natural rate of unemployment in Nova Scotia is
higher than 3 per cent.
700
650
600
550
500
2006 2001 2016 2021 2026
Canmac Economics Reference Case Statistics Canada Scenario 1
Statistics Canada Scenario 2 Statistics Canada Scenario 3
Statistics Canada Scenario 4 Statistics Canada Scenario 5
Statistics Canada Scenario 6
p
e
r
s
o
n
s
year
Source: Canmac Economics Ltd., Statistics Canada (2005c)
1_SummaryReport_Dem 5/3/07 2:16 pm Page 10
2.3 Implications
The baby boom group, now aged 41- 60, will continue to have a significant impact on the economic,
social and cultural fabric of society. Over the coming decade, the older members of that group will be
entering retirement with lower incomes, while the younger members will be entering their most
productive and high income period. As mortgages are retired, children leave home, and retirement begins,
the boomers will face choices about different housing options and different spending patterns (both for
money and time). The ageing of this large group also has implications for health care. An analysis of data
on major diseases indicates a marked increase after age of 60. As well, the use of physicians services
increases above the average at age 55 and continues to increase. Demands of this group will continue
to offer both challenges and opportunities for the private sector, the government and the not-for-profit
sector.
Before accounting for demographic effects, the Canmac model projected a modest surplus in the
provincial fiscal position. Demographics will impact the provincial fiscal situation in a number of ways
5
.
Revenues from personal income taxes are related to the level of individual earned (employment) and
unearned (e.g., interest, dividends, pensions, transfers, etc.) income. If post-retirement income is less than
pre-retirement income, people will pay less income tax which has fiscal implications. Expenditure areas
dominated by a younger population, such as education, offer an opportunity for expenditure reduction.
However, greater expenditure pressures will be on services oriented toward an older population such as
primary health care and pharmacare as well as a reorientation of other services to serve an ageing
population. It must be recognized that age is not the only factor in health care costs, technological
changes (e.g., use of drugs for treatment, new diagnostic equipment, etc.) are a significant cost driver.
Canmac had estimated that under present growth trends of health expenditures, its share of the budget
will be well above half of the budget by 2026. Canmac notes the demographic impact on the Provinces
fiscal position will be the result of management decisions.
With the increase in the portion of the senior population, it is important to examine attitudes about older
people that limit their full participation into mainstream society. Pressure to have seniors remain in the
active labour force will come both through labour tightness and from seniors themselves as they seek
to save sufficient funds to maintain a standard of living for retirement that in many cases is longer than
their parents generation. Research has shown that despite some perceptions to the contrary, there is no
significant difference between the job performance of older and younger workers; that is, the variations of
job performance within each group were larger than the variations between them.
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026 ::
5
Canmac did not mention that declining population as well as relative share of Canadian population will have a negative impact on
federal transfer payments.
1_SummaryReport_Dem 5/3/07 2:16 pm Page 11
International comparisons would suggest that there is room to increase involvement in the labour force of
older workers even before the age of 65. In 2005, the participation rate for Nova Scotians aged 50-64 was
61.8 per cent. For the same age group in 2004, USA, Japan, Denmark, Norway, New Zealand, Sweden,
Switzerland and Iceland had participation rates that ranged from a low of 70 per cent in USA to a high of
90 per cent in New Zealand. The participation rate for Nova Scotians aged 65-69 was 14.1 per cent in
2005. Taxation, hiring and human resource management policies would need to adapt to encourage older
workers to remain in the work force.
Volunteering is crucial for the not-for-profit sector. Seniors makes a substantial contribution to volunteer
hours. Canmac, by applying existing rates of volunteers by age groups to population projections by age
groups, were able to project an increase in volunteer hours of 6.6 per cent in the base case to 19.1 per cent
in the Statistics Canadas Scenario Six for the 2006-2026 time period.
6
However, it must be recognized
that the pressure to increase hours and/or remain in the workplace for the population 50 and older could
reduce the volunteering rates among the groups traditionally most inclined to volunteer. The cautious
conclusion Camac reached was that Nova Scotia cannot assume that the ageing population structure will
produce the level of volunteer hours that past trends suggest.
Migration, the trend towards smaller families and the raising ratio of seniors to prime working age
population
7
could mean that the historical model of families as the primary care-provider for elder family
members may not be sustainable, placing pressure on public and private institutions. The move toward
family-friendly workplaces not only needs to recognize the amount of two parent families in the labour
force with young children, but also needs of individuals to provide elder care.
8
Delayed or postponed adulthood contributes to the pressure of the middle aged as there has been a
doubling of young adults in their 20s still living at home in the last three decades. Implications of delayed
adulthood included delayed entry into full-time employment (wealth implications) and lower fertility
rates.
In a tight labour market, the participation of females is desirable but it has implications for family and
society. Research has indicated that higher female labour participation need not reduce fertility with the
right policy mix. The results of policies undertaken by the Quebec government since the 1988 seem
inconclusive as the fertility rate stabilized at about 1.6 in the 1991-1998 period and then drifted toward
1.5 by 2003. The key may be a multi-faceted policy to address the needs of families.
:: Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026
6
The 2006 figures are based on the Canmac population projection.
7
In 2001 there were 3.7 persons age 25-59 for every senior (65 and older). In 2006, there is projected to be 1.9 persons age 25-59 for
every senior.
8
Research conducted by the Healthy Balance Research Program indicated Nova Scotians, primarily women do unpaid caregiving than
anywhere else in the county.
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Despite their increased participation in the paid workforce, females continue to be primary caregivers for
children and seniors. Without additional support, the demands on women for unpaid care giving will
reduce their personal quality of life and their ability to contribute meaningfully to the market economy.
In economic terms, the current employment profile of women shows continuation of economic
disadvantage. Women are more likely to be working part-time, have interrupted work lives, and to be
clustered in a relatively few occupational categories. The results are women are less likely to be eligible for
or will earn less pension benefits than men, they are likely to make smaller RRSP contributions, and they
earn less. This means that unattached senior women, often widows, will continue to have high poverty
rates and will need more government assistance. Population projections indicate that women over 65 will
increase significantly. The policy challenge will be on two fronts: to provide income and other supports
for the older women; and to ensure the situation does not repeat itself for women just entering the
workforce or are early in their careers.
With a tightening labour market, social inclusion of marginalized groups is no longer an equity or moral
initiative, it becomes a economic imperative, part of the response to a tightening labour market. It was
previously discussed that the African Nova Scotian and Aboriginal populations have both grown more
quickly and are younger than the population as a whole. Both groups have lower levels of education, lower
labour force participation rates and lower incomes than the population as a whole.
Persons with disabilities also represent a marginalized group. Disability rates increase with age but 9.9 per
cent of Nova Scotia adults age 25-44 and 24.1 per cent of 45-64 olds in 2001 reported a disability. Levels
of education, labour force participation and incomes tend to be lower that those of the general
population. The range and type of disability varies.
Demographic impacts also have a regional dimension. As a general theme, the more rural areas will be
more negatively impacted by demographic change than their urban counterparts, and rural areas adjacent
to urban centres. Intraprovincial population flows will continue. By 2026 according to the base case,
Halifax Regional Municipality will represent nearly half of Nova Scotia population and when the four
other counties (Lunenburg, Kings, Hants, Colchester) within a 90-minute commute of downtown
Halifax are added with it, they represent almost 70 per cent of the population. International migration
appears to be more difficult to attract to non-urban areas.
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026 :,
1_SummaryReport_Dem 5/3/07 2:16 pm Page 13
These population flows, especially youth migration, result in the rural areas tending to have a higher
percentage of seniors. Productivity improvements, particularly in government services, could include
centralization of service functions, furthering impacting on the quality of life in rural areas.
In summary, the base case indicates a shrinking population. For all scenarios, the working age population
declines after 2011. If the Nova Scotia economy adapts to changing economic conditions and maintains
its historical growth pattern fueled by export demand from the growing Canadian and American
economies, the labour market will get increasingly tight. By 2016, the unemployment rate will be below
the natural rate of unemployment and wage pressures will be felt. If businesses and government do
not make policy changes to deal with the pressures, increased wages will result in products being
uncompetitive. The economy will contract - employment will decline and real wages will decrease.
Should this happen, it will put the fiscal situation of the Province on the revenue side under pressure.
Meanwhile the growing senior population, fueled by the ageing baby boom generation, will add to fiscal
pressure in terms of health-related expenses and other services related to seniors. The traditional patterns
of having families provide elder care may not be sustainable because of the increasing ratio of seniors to
prime working age population along with other demographic factors (smaller family size, mobility).
Support will be needed from the public and private sector, including accommodation in the workplace.
The growing seniors population also represents opportunity, a non-traditional supply of labour, the
possibility of increased volunteer hours and new business opportunities.
The demographic changes will be significantly felt by women who despite their increased participation in
the labour force still are the primary caregivers for child and elders. Decisions made to accommodate these
pressures (part-time jobs, interrupted labour force participation, etc.) and occupational clustering have
resulted in women having less income, less pension benefits, and smaller RRSP contributions than men.
This has huge implications for women in their elder years and also for government as it seeks to provide
income and other supports. With an increase in the 65 and older female population, these pressures will
continue to grow.
Tightening labour markets will force social inclusion in a way that moral arguments seemingly could not.
Disadvantaged groups such as Aboriginals, African Nova Scotians and persons with disabilities represent
a valuable source of labour and there will be more pressure to fully integrate the marginalized into Nova
Scotia society and economy.
These demographic pressures will be felt unevenly across Nova Scotia. Migration patterns will continue
to shrink populations of counties further from Metro Halifax. The number of seniors will be higher in
rural areas. There will be continuing urban-rural tensions over policy decisions, some of which will be
seemingly incompatible (e.g., rural youth retention vs. strategic investment in hub cities).
: Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026
1_SummaryReport_Dem 5/3/07 2:16 pm Page 14
3 What Should We Do?
The previous section indicated not implementing policy to deal with demographic changes, on the part
of both the public and private sector, would result in a low growth economy that would worsen the fiscal
situation of the Province. It was made clear that business as usual is not an option. This chapter of the
Report was designed to set forth a policy roadmap. A complete list of policy suggestions from the Canmac
Report is found in Appendix A: Compilation of Policy Suggestions from the Nova Scotia Demographic
research project.
For each of the three policy areas, Canmac identified the major objective:
Economic/labour market - maximize economic welfare and prosperity, i.e. grow the economic pie;
Fiscal - ensure the public needs of citizens are met in a fiscally responsible manner; and
Social - ensure that all citizens share in the economic progress, i.e., share the economic pie.
These policy areas are interrelated. Actions to achieve one of these objectives can reinforce policy success
in another area. However, in some cases the actions are contradictory, policy success in one area can imply
reduction of success in another area. In order for government policy to be effective it must adopt a holistic
approach. As part of the holistic approach on the part of government, and indeed the larger society, life-
course flexibility is the key to ensuring an appropriate policy environment. This means designing policy
with more choices for the individual and ensuring better family friendly workplace policies. As well,
effective policy formulation must include its gender/diversity analysis.
The key to achieving these goals is that the economy has to grow, which removes some fiscal pressure and
makes sharing the pie easier. The key to economic growth in terms of demographics is labour force
development. This issue is more than increasing the size of the labour force; it is also about improving the
quality of the labour force. Management of human resources or human capital, both in the context of the
Province and of the firm will become the number one strategic planning issue in the next decade.
The Canmac Report indicated that there are three policy levers to use to address the management of
human resources:
Productivity;
Labour Force Participation; and
Migration.
3.1 Productivity
Labour productivity is the [value of ] output produced per unit of labour input (employee, hours worked,
etc.). Growth in productivity allows wage levels to rise on a sustainable basis. In Nova Scotia,
improvements in productivity must occur in both the public and private sector and in the goods and
services sector. Growth in productivity can occur through any combination of three sources.
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026 :,
1_SummaryReport_Dem 5/3/07 2:16 pm Page 15
Capital deepening, increase in capital services per unit of labour. It is investment in capital
(e.g., machinery such as computers, precision cutting tools) that enables workers to become more
productive.
Labour quality, labour input per unit worked. This reflects a better educated/trained and more
experienced work force.
Total factor productivity, output growth not accounted for by growth in inputs. It can include
technological change and management changes.
The benefit of pursuing a high-quality labour force strategy is not only for productivity but it enables
people to be employed in high-wage, high-skill jobs. The pressure to improve the quality of the labour
force is compounded by a combination of changes in the economy and existing skill level. As the economy
becomes increasingly knowledge-based, which includes the ability to adopt and use different equipment
and processes in what is generally seen as traditional industries, there is greater need for the Level 3
skills. However, as indicated by the 2003 International Adult Literacy and Skills Survey there is
considerable room for improvement in literacy, numeracy and problem solving skills.
Life-long learning must focus not only on workplace training but also on the underlying need for literacy
and numeracy skills. As well, raising the portion of students, our future workforce, to at least Level 3
is essential. It is critical that middle-aged and older people in the labour force group have easy access to
education/education enhancement and training/re-training.
A key to productivity growth is innovation, and for small open economies such as Nova Scotia this
innovation is driven by diffusion (access to) and adoption of technology (DAT). For companies which
have head offices elsewhere, new technologies are often centrally adopted and then implemented, through
training etc., in their Nova Scotia operations. DAT is more problematic in the public sector where the
process can be irregular. For local business which do not have good connections to innovations elsewhere
and/or the managerial skills to effectively adopt these ideas, DAT is poor.
3.2 Increasing Participation Rates
Labour force participation rates can be increased by:
increasing the participation rate of existing key traditional segments of the population, primarily
ageing workers already in place; and
increasing participation rates of population segments that have historically low participation rates.
The base case already assumed increasing female participation rates in the prime working age groups
while the male rate remain relatively stable, recovering from the dip in the 1990s. Participation rates show
a sharp decline with age, even before the official retirement age. The participation rate at 36.0 per cent
for people aged 60-64 was less than half that for people age 50-54. In some cases, retirement was
involuntary (e.g., job losses, poor health).
:o Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026
1_SummaryReport_Dem 5/3/07 2:16 pm Page 16
A number of existing policies serve to depress employment of older workers: early retirement programs;
pension rules; and mandatory retirement. Attitudes regarding older workers also affect their working
career as some employers are reluctant to train, viewing older workers as having a shorter working life.
Changing the above policies, adopting an unconventional mix of pension benefits and work, improving
job flexibility and encouraging movement of the retired into self-employment will help increase the
participation rates of older workers. As well, in an effort to recognize the increasing levels of retirement
we need to improve workplace mentoring.
As indicated earlier in the paper, the Aboriginal and African Nova Scotian populations have lower rates
of participation in the labour force. Policies to encourage increased participation will be complicated.
As Canmac noted, these policies will require a multi-faceted approach involving education, community
services, health and economic development programs. In the larger community, anti-racism education
and increasing cultural competency will need to be complementary actions.
Policies to increase the participation rates of persons with disabilities will include increasing education
levels where needed, changing attitudes in the workplace, providing improved adaptive technologies and,
where appropriate, provide affordable and accessible transportation.
3.3 Migration
Migration to Nova Scotia can come either through interprovincial or international (immigration) sources.
Immigration is a shared responsibility with the federal government and there is the constraint of federal
policies and administration. As well, Nova Scotia must compete with other more economically attractive
provinces for immigrants like British Columbia, Alberta and Ontario.
Attracting interprovincial migration may require special incentives. These policies are not without their
disadvantages, including impact the on relationships with other provinces and attractiveness to retirees
who may not enter the labour force, thereby defeating the purpose of the program.
Successful migration programs will require proactive efforts at the community level. Two examples were
provided (Halifax Regional Immigration Strategy and the Colchester project to return youth to rural
areas) with the recommendation that the initiatives be monitored for their potential as key components
of future immigration policy.
Canmac judged that productivity is the most effective policy thrust. Although increasing the labour
force participation of marginalized groups is both socially and economically desirable, it is not enough.
9
A common theme is the importance of labour market training. It is an integral part of successful
technological adoption, it increases labour force quality and it increases the participation rate or
Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026 :;
9
Editorial Comment Although there is considerable room for increasing the participation rate of older people, improvement will not be
easy because of a number of factors (underlying educational attainment, health issues, pension issues that would require federal policy
changes, location, etc.). Increasing the rates will help but it is more in the nature of easing the transition as people will age and eventually
leave the workforce.
The migration lever will prove difficult. The population flows in this area are the largest and the policy must increase the inflows and/or
decrease the outflows in an era when individuals movement cannot be constrained. Nova Scotia has to compete both nationally and
internationally for migrants as many jurisdictions face the same issues as Nova Scotia. At the moment, Nova Scotia is not viewed as
having the same economic opportunities as other jurisdictions within Canada.
1_SummaryReport_Dem 5/3/07 2:16 pm Page 17
marginalized groups including immigrants, who often need specialized training to support language
requirements.
Response to these demographic changes may require an examination of work and definition of job
requirements. Part-time work which may offer part of a solution should be examined in light of benefits,
pension and union requirements, among other factors. Redefining job responsibilities may include
shifting carefully defined responsibilities from high-credentialed to low-credentialed positions.
Canmac noted that effectively dealing with the demographic impact will require a combination of
training initiatives, demonstration and pilot project, research and policy change.
3.4 Fiscal
On the expenditure side, Canmac identified the policy challenges as increasing productivity and
containing health expenditures. These will have to occur in an environment where government will be
facing its own human resource challenges. On the revenue side Canmac noted that the Provinces own
source revenue growth is constrained by the economy and the need to remain competitive. On the subject
of federal transfers it was suggested that these transfers should include an age-related factor, provinces with
larger senior populations should have this factor reflected in their transfers. As well, the Province should
argue for advanced funding transfers to reflect future problems of pending demographic shifts.
3.5 Regional
Demographic impacts will be felt unevenly as population shifts tend to favour urban areas, which have
a significant impact rural economic and social development. This is one area where policy can have
contradictory results. A number of provincial policies initiatives such as migration can be more difficult
to achieve in rural areas. Other initiatives such as productivity improvements that include centralization
could have more of a negative impact on rural areas. It is challenging to develop regional development
policy so that there is not a tradeoff between economic prosperity and other social goals.
10
Canmac noted
that there is a need for consistent support over the next decade for community development organizations
and programs that may be able to promote the creation of business ventures that offset rural out-
migration.
In conclusion to quote the last paragraph of Canmacs report:
Canmac concludes that if Nova Scotia continues as it has in the past, when it has had to deal with long-
term labour surplus, it will find itself in a fiscal and economic upheaval. However, future challenges are
solvable - Nova Scotia can meet the challenges of the ageing population. Greater efforts to increase
productivity above historic levels, more flexible work arrangements to increase participation rates and more
success in attracting in-migration will create an environment where our society will be fully employed and
prosperous into the next generation (pg. 128-129).
: Nova Scotia Demographic Research Report: A Demographic Analysis of Nova Scotia into 2026
10
Canmac noted that although education levels have been rising in rural Nova Scotia there is a residue of lower literacy and numeracy skills
in these areas which can result in structural unemployment, even though there are labour shortages. Labour force development programs
could be used to achieve both social and economic goals in this area.
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