As the worst global recession since the Second World War grinds on – although the Bank of Canada has declared the downturn over in Canada – workers are facing pay cuts, unpaid leave and layoffs. Labour strife has swelled. The wealth hit from battered investment portfolios and falling home prices is forcing consumers to adjust their expectations, too. Today is the fourth instalment of the Financial Post’s summer-long “Getting Real” series exploring the reality check now underway.

The global recession has done its share of damage to the Canadian job market, with nearly 370,000 employees shed from payrolls since last October. For workers lucky enough to keep their jobs, many have seen pay and benefits reduced.

But the job market and compensation packages will recover, partly due to a better economy, but also because of an ageing population. Even those sectors hit hard in the recession know it.

For instance, roughly 30% of the recent job losses have been in the construction sector. Yet, this country’s Construction Sector Council said it will need 317,000 skilled workers between now and 2017. Of that amount, 168,000 workers would be needed to replace retiring Baby Boomers.

Mining has said it will need 70,000 new workers over the next decade to meet projected growth needs. It is expected that 40% of that industry’s workforce will retire by 2014.

Certainly, the recession and impact on equity markets may force certain workers in the 55-and-older segment to work a little longer in the hope of building up their portfolios. But all that means is a delay in terms of when an ageing population will exert its influence on the labour market, say analysts.

“If we have a normal type of recovery, in about three to four years the demographic situation will lead to massive shortages,” said Roger Sauvé, president of People Patterns Consulting. “It will intensify over the next 15 to 20 years.”

Studies abound about the impact of Canada’s ageing population. Yet, despite all the warnings, it appears Canadian employers haven’t done much to prepare. In a survey conducted late last year by the Conference Board of Canada, more than three-quarters of organizations, or 77%, said the greying of the Canadian labour pool will be an issue for them. But the survey also indicated just 6% are making efforts to hold on to mature workers.

For an example of how bad it could get for Canadian employers, just look to Japan. The world’s second-largest economy saw GDP shrink in the first quarter by a startling annualized rate of 15.2%. Yet, in a survey taken in the first quarter by employment placement firm Manpower Inc., 55% of Japanese employers – well above the global average of 30% – indicated they were having difficulty filling vacant positions.

As it happens, Japan has one of the fastest ageing populations in the world, with just 2.6 people of working age for every person aged over 65, compared with an average of four to one for most industrialized countries, according to data from the Organization for Economic Co-operation and Development.

“If Canada were facing this demographic challenge in isolation, it might be easier to adapt to the situation. But this is not the case,” said a recent study on pending labour shortages done for the Atlantic Institute for Market Studies, a Halifax-based think-tank. “Most of the developed world faces similar challenges. The coming decades will witness a global competition … for labour of all kinds, and the problem will only get worse.”

Recent work from the C.D. Howe Institute indicated that under current conditions, the old-age dependency ratio – or the ratio of Canadians 65 and over to those of working age – will skyrocket from its current 21% level to more than 45% by 2058.

William Robson, C.D. Howe president and co-author of the report on demographics, said higher compensation is likely to emerge once the economy recovers and more Boomers start retiring. However, he warned that might not necessarily mean fatter wallets for workers as governments scramble to pay old-age benefits and fund health care – which will come under greater strain with the ageing population.

“The demographic threat to public finances is going to manifest itself in a higher tax burden that drives a bigger wedge between what employers are having to pay and what employees can take home. And that may increase the squeeze on employers all the more,” he said.

Policymakers are aware of the coming population crunch. In May, the federal government announced changes to the Canada Pension Plan that would encourage older workers to keep working until age 70 by paying out richer benefits. The C.D. Howe has said policymakers should do more, including an official change of the retirement age to 70, although that would likely spark a fight with public sector unions whose members have access to gold-plated defined-benefit pension plans that they can access at 65, if not earlier.

Furthermore, the federal and provincial governments are working to eliminate internal trade barriers that prohibit, or make difficult, labour mobility in Canada.

Lori Rogers, vice-president of staffing services for Manpower Canada, said companies in the future are likely to focus much of their time on developing strategies that keep existing workers with the organization for longer periods. That likely requires tailoring work packages that allow more flexible work schedules and enhanced benefits that appeal to older workers.

Mr. Sauvé, the consultant, said he has clients that recognize the challenges ahead. “Some companies were trying to not cut jobs too much in this downturn because if the economy picks up again, they won’t have the workers and won’t be able to get them back.”