Ahead of the Curve Social and Economic Impacts of Changing Demographics

An overview of a project to assess social, economic and labour market impacts of demographic change in Nova Scotia and to identify appropriate policy directions

Introductory Growing awareness that demographic change will have a major impact on social, economic and labour market conditions in Nova Scotia in the very near future –Births have fallen dramatically since 1990, while deaths have increased steadily so that we are now at the point, where there is no population growth due to natural increase –Immigration is low and currently provides only a limited source of population growth –Inter-provincial migration generally results in a net outflow to other jurisdictions

Introductory This awareness is reflected in a variety of policy initiatives being undertaken across government such as: –Immigration Strategy –Strategy for Positive Ageing (to be released Nov 15) It has also shaped broad policy initiatives such as: –Skills Nova Scotia Framework –Opportunities for Prosperity (Economic Growth Strategy) –Community Development Policy Initiative

Introductory It is clear that the period of demographic change we are now entering will touch on almost all aspects of life in Nova Scotia There is a need to ensure that its implications are well understood across government and to identify the appropriate policy directions to ensure that we can respond effectively to the challenges and opportunities that lie ahead

Introductory The presentation today will: –Provide a brief overview of recent demographic trends across Canada –Assess likely patterns of demographic change in Nova Scotia –Identify some of the key issues that we hope to address in the Demographics Research Project that we are embarking on –Provide an overview of the work that will be undertaken

The Situation - Across Canada

The Situation – Across Canada

The Situation - Nova Scotia

The Issues

Issues: Economic Growth and Development Economic growth (measured by GDP r) results from: Population growth Increasing labour force participation Reducing unemployment Increasing productivity GDP r = P * L/P * (1-U/L) * (GDP r /E)

Issues: Economic Growth and Development Population growth (P) In Nova Scotia efforts to respond to demographic challenges have focused on population strategies – immigration and repatriation There are also significant concerns about retaining our youth population These are essential elements of an effective strategy to address the challenges of demographic change Ensuring that attractive job opportunities are available is essential to their success

Issues: Economic Growth and Development Labour Force Participation (L/P) An ageing population and ageing workforce suggest a decline in the labour force participation rate over time Growing proportion of the population is beyond age at which individuals normally retire Within the population of working age participation rates decline with age Need to consider efforts to increase participation of under-represented groups (Aboriginal, Black, Disabled) Efforts to increase participation of older population can also have significant impact

Issues: Economic Growth and Development Unemployment Rate (U/L) Issues here include: Ensuring that economy can generate employment opportunities Measures to ensure that the labour market functions effectively to match up workers and jobs (reducing frictional unemployment) Ensuring that workers have the skills that are in demand (hence the importance of lifelong learning)

Issues: Economic Growth and Development Productivity (GDP r /L) Efforts to support economic development, innovation and productivity growth of greater importance Province’s economic development strategy (Opportunities for Prosperity) and the Premier’s Advisory Council on Innovation Ensuring that Nova Scotians have the necessary skills and entrepreneurial capabilities is an essential complement to these efforts Province’s Learning for Life strategy and the Skills Nova Scotia Framework

Issues: Labour Market Development Labour market issues –Skill shortages –Labour market adjustment –Rising levels of retirements

Issues: Labour Market Development Skill shortages Assuming an ongoing capacity to generate employment opportunities, a slowdown, and ultimately decline, in labour force growth will push the labour market towards a situation of shortages The question here is how the labour market will adjust: Wage adjustments In-migration and immigration Participation rates Productivity growth Need to understand how this will play out

Issues: Labour Market Development Labour market adjustment mechanisms Turnover in the labour market is essential mechanism by which economies adapt to changing conditions Older workers have relatively low turnover rates Is this likely to become an issue?

Issues: Labour Market Development Rising levels of retirements Employers will need to adapt to increasing retirement rates and ensure that they can maintain the skills of their workforces Impact will vary across industries and occupations Education and training system may need to adapt

Issues: Changing Industrial Structure Economy will need to adapt to significant shifts in demand Shifts in consumption demand consequent on an ageing population Changing demand for education and training Declining number of youth Increase need for lifelong learning opportunities to support labour force development Increased demand for health care Will increasing share of resources devoted to health care and possibly other non-tradeables, will we be able to maintain or competitiveness in external markets?

Issues: Other Additional issues that need to be better understood Impact on government fiscal balances and the capacity of government to respond to needs? The social and economic vitality of our rural communities Social change

The Project

Being undertaken within the context of the Skills Nova Scotia Framework under the direction of the Labour Force Planning Committee (LFPC) with the approval and support of the Deputy Ministers’ Committee on Workforce Skills

The Project Steering committee chaired by the Department of Education Includes representation from across the Provincial government: –Education –Economic Development –Finance –Health –Senior Citizen’s Secretariat –Public Service Commission –Advisory Council on the Status of Women –Community Services Service Canada also represented

The Project Canmac Economics Ltd contracted to complete the project Canmac has extensive experience in economic analysis and modeling Strong multi-disciplinary team, including solid policy analysis capabilities (includes two former Deputy Ministers)

The Project Project is intended to: –Provide a sound understanding of the social, economic and labour market implications of demographic change in Nova Scotia (“What does it mean for Nova Scotia?”) –Identify critical challenges and opportunities –Assess appropriate policy options and directions

The Project There are three phases to the project: 1.Scenario development and impact analysis Uses the Canmac model (includes macroeconomic, demographic, fiscal, input- output, and labour supply/demand components) Incorporates alternative assumptions about the external environment

The Project 2.Identification of critical challenges and opportunities Based on simulations, key informant interviews and a literature review Also includes assessment of size and nature of required policy response

The Project 3.Identification of appropriate policy directions Uses a Delphi approach to judge the effectiveness of policy options Uses an iterative survey process with key informants to achieve consensus

The Project Expected Completion Date: 31 March 2006

Thank You Discussion