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Aboriginal Workers Can Support, But Not Sustain, Canadian Workforce

Glen Hodgson, Senior Vice-President and Chief Economist, Forecasting and Analysis
September 27, 2010

Canada needs more workers to sustain its long-term economic growth. Immigration is already the primary source of labour force growth, and The Conference Board of Canada assumes that immigration levels will rise from 250,000 to 350,000 by 2030. Even an increase of this magnitude will not bring in enough workers to arrest Canada’s declining overall economic growth potential.

What about domestic sources of labour, particularly groups currently under-represented in the Canadian labour force? While visible minorities, immigrants already in Canada, women, disengaged youth, and people with disabilities could support labour force growth, one group stands out as a rich domestic source of potential workers: Aboriginal people.

Aboriginal Population Growing

The Aboriginal population is currently the fastest growing in the country. Between 2001 and 2006, it increased by 20.1 per cent; the overall population rose by 5.4 per cent over the same period. The 2006 Census reported an Aboriginal population aged 15 and older of 824,000. Yet the Aboriginal participation rate in the workforce was 63 per cent, below the national average of 67 per cent. The Conference Board estimates that raising the participation rate of Aboriginal people to the national average would add 32,000 workers to the Canadian workforce.

One group stands out as a rich domestic source of potential workers: Aboriginal people. The Aboriginal population is currently the fastest growing in the country.

Increasing the participation of Aboriginal people in the workforce can only be accomplished over time, so much of the focus should be on the next generation. The 2006 Census identified 348,900 Aboriginal people under the age of 15 in Canada. If the workforce participation rate for these younger Aboriginal people were to reach the national average, an additional 14,000 Aboriginal workers would join the labour force. Together, 46,000 more workers would be added from the existing Aboriginal population—a valuable complement to more effective immigration policies, but just a fraction of the actual number of workers that Canada needs to sustain its economic growth potential.

Aboriginal people could make a much more important contribution to labour force growth over the long term. Based on current demographic trends, Aboriginal employment could grow by 200,000 by 2026 if the national average for labour force engagement can be attained—equivalent to a 1 per cent increase in total Canadian employment, or about 80 per cent of a single year’s immigration at current levels.

High School Graduation Key

Raising the participation rate for Aboriginal people of all ages, on and off reserve, will require an array of policies that encourage education, skill development, and increased labour force attachment. A reasonable first objective is for the Aboriginal population to attain a high school graduation rate equal to the national average.

The policy objective should be to achieve a successively higher completion rate for each graduating class of Aboriginal students.

Aboriginal high school graduates have a labour force participation rate virtually identical to that of non-Aboriginal Canadians. The current high school graduation rate for Aboriginal people living on reserve is only about 50 per cent, far below the non-Aboriginal national average of 90 per cent. The graduation rate for Aboriginal people living off reserve is a bit higher, at 67 per cent. The policy objective should be to achieve a successively higher completion rate for each graduating class of Aboriginal students.

Greater Aboriginal labour force participation would help achieve economic and social goals—higher individual incomes, reduced poverty among Aboriginal populations, and greater social cohesion overall. In terms of labour, the Aboriginal population can supply only a portion of the workers needed. Higher immigration levels will be required to meet the demand for labour, and Canada needs modernized, integrated, and well-managed immigration policies.


Glen Hodgson Glen Hodgson
Senior Vice-President and Chief Economist,
Forecasting and Analysis
Publication
Sustaining the Canadian Labour Force: Alternatives to Immigraion

Related Publications
Canadian Outlook Long-Term Economic Forecast: 2010
Renewing Immigration: Towards a Convergence and Consolidation of Canada’s Immigration Policies and Systems
True to Their Visions: An Account of 10 Successful Aboriginal Businesses

Related Networks
Leaders’ Roundtable on Immigration