Thank you.
That was the august Deputy Governor Boivin at the Economic Club.... No, I'll get the adjective in the right place.
This is a serious issue, as you know, which is why this committee and others have spent time on it. I think you personally have spent time on it.
Without question, this sharp shift in demographics is coming. In fact, even over the tail end of the horizon of our projection we see the impact, in that one of the big contributors to Canadian growth in the decade in the run-up to the crisis was the expansion of labour input, to use the economic term—basically, the proportion of the population that was working, and how much they were working. Part of that was a couple of very positive demographic phenomena. The economy was putting people to work, more Canadians were working, more women were entering the labour force, people were working for a longer time, and also we had the demographics at our backs.
Now that's shifting, and that is one of the reasons why our rate of potential growth in this economy has shifted down from about 3% in the early part of the last decade to about 2%. In fact, right now our estimate of potential growth for the economy in 2012 is 2%, and 2.1% in 2013 because of the lower labour input that's happening, which reflects demographics. As you alluded to in your remarks, and as Jean Boivin referred to, that is going to accelerate over time.
The offset to that can only be an increase in productivity, the productivity of those who are working. I shouldn't say that it can only be. There are some elements of people working longer, ideally by choice and not by circumstance. We do see some evidence of that. We continue to see, in fact in the employment performance since the trough of the recession, that employment of Canadians aged 55 years and up has actually been one of the stronger bits of employment growth that we've seen--again, more people working longer, ideally by choice.
This is a major issue, without question. Slower potential growth of the economy because of demographics will impact all forms of government revenue at all levels of government. This will occasion difficult choices that only you or the collective people in this House are empowered and qualified to make, those judgments about balancing off where the savings need to be with respect to productivity, other fiscal choices, inequality, and other concerns that you have to balance.
So you're absolutely right that it's a major issue. We've provided some simulations. We can do more if that's of use for the committee.