Canadian demographic and labour market shifts

Canada is experiencing a demographic and economic transition marked by an ageing population and a shrinking workforce. Analysis from the Bank of Canada indicates that population growth reached its lowest rate in over a century in 2025, driven by the retirement of the baby-boom generation and policy changes that reduced immigration and temporary residency levels.

These shifts have raised concerns regarding weakened economic growth, reduced demand, and lower productive capacity. While immigration has historically bolstered the labour force, it has also increased pressure on housing and public services. To address the shrinking workforce, there is an increasing focus on technological investment to enhance productivity.

Concurrently, government officials have identified specific labour supply gaps that threaten major national projects. Parliamentary secretaries have noted a disconnect between job seekers and industry needs, citing skill mismatches and a lack of investment in employee training compared to other OECD nations. Additionally, employers have reported a shortage of soft skills, which has been described as a lingering consequence of the pandemic.