Marc Desormeaux, the Principal Economist of Canadian Economics at Desjardins, recently shared his insights with CanadianSME on the report titled “Charting a Course to Their Brightest Future: Navigating the Opportunities and Challenges of Generational Change,” released by Desjardins. He discussed the impact of this generational change on Canada’s small businesses and the overall economy, emphasizing the finding that many business owners plan to sell or transfer their businesses to family members as they retire. Marc also highlighted the importance of taking measures to ensure sustainable healthcare funding amidst demographic challenges. Additionally, he delved into the regional variations in climate change concerns and their implications for Canada’s efforts to address the climate crisis. Marc identified key areas where innovation needs to accelerate to achieve net-zero goals and discussed ways to foster an environment conducive to rapid innovation. He also explored the role financial institutions and organizations like Desjardins can play in supporting young people and businesses during this period of generational change. Finally, Marc touched upon the long-term implications of generational change, an aging population, and the climate crisis for Canada’s economy, while providing insights on steps to ensure a prosperous and sustainable future.
Marc Desormeaux is Principal Economist, Canadian Economics at Desjardins. He combines a global perspective with deep knowledge of Canada’s provinces and public policy landscape to tackle the most pressing economic questions facing Desjardins’ members and clients. Marc previously worked as a senior economist at Scotiabank—where he advised clients in Canada, the US, Latin America, and Asia—and as an economic forecaster at the Conference Board of Canada. He is the creator of Desjardins’ quarterly Provincial Economic Outlook report and weekly provincial bond market commentary and is frequently sought out by media—in both official languages—for his views.
Desjardins Economics recently released a report titled “Charting a Course to Their Brightest Future: Navigating the Opportunities and Challenges of Generational Change.” Can you provide us with an overview of the report’s key findings and its implications for Canada’s young people?
This third and final report in our three-part series exploring the economic futures of Canadian youth uncovered that young people will be facing both enormous challenges and opportunities over the coming decades. These will include everything from climate change – and the accompanying adaptation of our environment and industries, and the energy transition – to innovations spanning AI and autonomous vehicles. What’s more; not only will there be an enormous income transfer from an aging population but we will also see further costs and challenges as a result, which today’s youth will have to contend with as their parents get older.
The report highlights that many business owners plan to sell or transfer their businesses to family members as they exit the workforce. How significant will this intergenerational wealth transfer be, and what impact might it have on Canada’s small businesses and the economy as a whole?
With many small business owners planning to exit the workforce in the coming years, there will be huge opportunities for the next generation to take control of some of that wealth. One study done by the Canadian Federation for Independent Business estimated that as much as $2 trillion worth of assets will be transferred to the next generation. That next generation will also increasingly assume leadership roles in Canada’s business community.
Our first report in this series identified that younger Canadians are more entrepreneurial than previous generations, meaning that not only will we see a shift in possession of wealth and leadership opportunities, but we also expect this generation to become the driving force behind entrepreneurship going forward.
With Canada’s aging population, healthcare costs are expected to rise steadily. How will this burden be carried by working Canadians, and what measures should be taken to ensure sustainable healthcare funding in the face of demographic challenges?
Canada’s aging population will fundamentally change our society, economy, and public finances. We expect to see far more health costs, growing more rapidly than the workforce, which means that working-age Canadians will have to bear more and more costs. On the public side, most of these costs will be borne by provincial governments as they are responsible for healthcare, but the aging population also puts pressure on the federal government to supplement and offer assistance where it can, particularly through the Old Age Supplement.
The good news is that immigration can play a role In solving this problem. Research tells us that immigrants are contributing to Canada’s productivity, employment gains, and ultimately economic prosperity – and with more immigrants of prime working age coming to Canada, we expect that this trend will help offset costs from the aging population.
Concerns about climate change vary across the country, with Quebecers being overwhelmingly concerned. Could you discuss the regional variations in climate change concerns and their implications for Canada’s efforts to address the climate crisis?
The report found that as many as 3 in every 4 Canadians are concerned about climate change, with levels of concern varying by province – Quebec is the most concerned, for example, at a staggering 86% rate. We also see that youth are more concerned than the generation that came before them, and for good reason, with evidence of climate change everywhere around us, such as through wildfires and floods. We expect to see youth make different decisions than previous generations based on climate change implications, including around diet and whether to have children. If governments continue to miss emissions targets, we will expect these types of decisions to continue and shape our country’s future.
Achieving net-zero emissions will require an unparalleled pace of innovation. Can you highlight some key areas where innovation needs to accelerate to achieve net-zero goals? How can Canada foster an environment conducive to rapid innovation in these areas?
As we push toward net zero, we are going to see real risks emerge, including higher inflation or more financial market volatility, as well as opportunities which come from innovation. As some industries – such as the non-renewable energy industry – become less prevalent than they have been in the past, we expect to see new opportunities in a number of fields, including critical minerals, repair and deconstruction of non-renewable energy, technology, and others which we may not even be aware of yet. This innovation is going to be driven by the young, entrepreneurial generation that is up and coming today – so it will be important to harness young people’s innovative spirit through education and employment opportunities pushing for change.
In your opinion, what role can financial institutions and organizations like Desjardins play in supporting young people and businesses during this period of generational change?
Financial institutions have a responsibility to support young people and businesses, especially during periods of change. These institutions have important connections with governments, businesses, and the broader population, meaning they are well-positioned to understand different groups’ needs and challenges. They also have the resources for information-sharing to help young people and businesses be aware of – and prepare for – the challenges ahead, which was one of our objectives with this report.
Looking ahead, what are the long-term implications of generational change, aging population, and the climate crisis for Canada’s economy, and what steps should be taken to ensure a prosperous and sustainable future?
We expect to see enormous long-term change in Canada, much of which can’t be accurately predicted as the pace of innovation today, both here and around the world, is happening more quickly than anyone had anticipated. It will be important to understand that technological change and artificial intelligence is supporting additional productivity and opportunity going forward for youth, so we can continue to harness their entrepreneurial spirit.
In the short term, to ensure a prosperous and sustainable future, we would like to continue to see targets and criteria for immigration properly targeted toward labour market integration, so increased immigration can continue to benefit all Canadians and support our future.
