Definition of the problem
The standard of living of many Canadians has improved due to better payments and income. The demographic changes are likely the challenge that the improved living standard and may hamper the employment rate (Her Majesty the Queen in Right of Canada, 2012). Furthermore, the working population has declined-the ages 15-64 and therefore affecting the employment rate.
Background/Situation Analysis
Since 1950, Canada’s population has been declining, a phenomenon related directly to declining fertility rates. The fertility rate in 1959 was 3.9 children per woman; it dropped to 1.7 children per woman in 1979(PLAN, E. A., 2013).It is believed that during the baby boom of the 1950s, the fertility rate was 2.8 per woman. The price has declined, and it now stands at one child per woman annually. Population experts predict that the trend is set to continue for the next decades with approximation put at 0.7 per woman come 2050 (PLAN, E. A., 2013).
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The life expectancy, which has improved from the 1920s by 20years. In the 1970s, the population pyramid was massive at the base, reflecting the presence of youths. However, today, the population’s structure is not in the form of a pyramid. It is expected that in 2030, the community will be slightly above 40millions and the monument will be narrower at the base with a large number of old age(PLAN, E. A., 2013).
Economic Analysis
Economic theory dictates that in terms of age, participation in the labor force is meager when the individuals are of about 15 years old, becomes at peak when they are between 25 and 50 years after which it declines very fast.
Benefit-Cost Analysis and cost-effectiveness
As a result, the nominal GDP is directly affected in terms of labor supply. After all, real GDSP is a result of the growth of labor supply and productivity. The real GDP for Canada since 1972 has been averaging 2.9 percent, and half of this is because of the labor supply. The labor productivity averaged a pace of 1.2% annually from 1972-2011, resulted in a GDP of two thirds from 1972 to 2050s ( PLAN, E. A., 2013). Moreover, the per capita is expected to be $60,000 to $24,900 or 30% lower than standard valuation (PLAN, E. A., 2013).
Risk Analysis
The risks aging ahs exposed the Canadian economy includes slower economic growth, reduced growth of revenues for the government, and limiting the ability of the government to finance public expenditures as before, especially in the 1980s (Her Majesty the Queen in Right of Canada, 2012). Besides, there is pressure on federal spending on critical services such as healthcare and elderly health care benefits. Furthermore, the economy will be indebted to other economies, therefore, causing some fiscal pressures. As a result, there is likely wood of decline of debt to GDP ratio due to strain on financial flexibility and sustainability.
Option Analysis
The willing older people to work past there retirement has been encouraged, primarily through policies such as prohibiting the idea of mandatory pensions. For instance, the government can balance budgets for medium terms while preserving the social programs that will maintain the finances at sustainable levels and give some flexibility. Furthermore, the government has allowed deferral of the Old Age Security pension. Besides, the government can invest in immigration, which will boost labor provision.
Assessment of the Proposal
The strengths
A review of this kind of the problems and challenges that the economy of Canada due to aging and links the Analysis of the economy to the various cost analysis connected to the challenges that arise from the aging of the population. It has emphasized the risks that occur with low labor growth and linked it to poor economic performance. It explains the trends that are expected of the fertility rate in the coming decade and even goes on to relate life expectancy to the declining and aging population in a more elegant way.
Weaknesses
However, it is incomplete and not balanced well. This is in terms of contrasting the benefits of the decline of the population to the quality of life. The paper paints enhanced life expectancy as a bane rather than as a significant achievement. There has been more attention to the negativities of these two aspects the reduced life expectancy and improved life expectancy. The Analysis under the economic Analysis is short and appears vague.
Personal Recommendations
The government needs to ensure that its retirement system is tailored in a manner that it accommodates the need of the changing needs of its aged population. This way, it will be able to offer retirements transitions and even make it optional. Besides, it can make sure the skills of the older population matches the need in the labor market. Moreover, the willing older people to work past there retirement has been encouraged, primarily through policies such as prohibiting the idea of mandatory withdrawals ( Her Majesty the Queen in Right of Canada, 2012). The best practice in the world involves allowing immigrants to bring the youth and need skills with them; this may not prevent aging but will boost the labor provision and stir aging economic growth.
References
Her Majesty the Queen in Right of Canada (. (2012). DOF Fiscal Implications of Canadas Aging Population [Ebook]. Cette publication estégalementdisponibleenfrançais. Cat. No.: F2‐217/2012E‐PDF ISBN: 978‐1‐100‐21409‐2. Retrieved from http://file:///C:/Users/User/Downloads/DOF%20Fiscal%20Implications%20of%20Canadas%20Aging%20Popn%20F2-217-2012-eng%20(1).pdf
PLAN, E. A. (2013). PROSPERITY
