RBC economists warn retirements and shrinking under-35 workforce will tighten labor supply by 2026, offsetting current joblessness.
Canada’s elevated unemployment rate is obscuring deeper labor market strains, with retirements surging to 25,500 monthly and expected to remain high into the 2030s. The under-35 workforce, excluding immigration, is projected to shrink by 186,000 annually over the next five years, exacerbating supply constraints.
By 2026, the available workforce will contract relative to the population for the first time outside pandemic disruptions, tightening labor conditions as unemployment declines. Demographics-driven retirements and a dwindling younger workforce will intensify competition for workers, even as near-term joblessness persists.
The shift signals prolonged structural challenges, with labor shortages likely to re-emerge as economic conditions improve and unemployment rates fall.