A surge in the level of Canadians leaving their jobs could result in worsened labour shortages as the country recovers from the pandemic, Royal Bank of Canada said in a report.

The rate of people retiring and of those quitting their jobs dropped significantly during COVID, falling 20 and 40 per cent respectively according to a new report written by RBC Economics’ Andrew Agopsowicz. But RBC expects numbers to return to pre-pandemic levels as the labour market comes out of the crisis.

Retirements, which were deferred by the pandemic, are set to jump to 125,000 in the second half of 2021 driven by long-term demographic trends.

RBC said the increase in people leaving the workforce will likely exacerbate labour shortages through the summer and fall, particularly when it comes to skilled workers.

Canada’s labour participation rate bounced back from pandemic declines and currently sits at 65.2 per cent. But it’s still at levels not seen since the mid-1990s, the report said.

The report said the country should tap into under-utilized sources of labour force growth such as immigration in the future. However, it also pointed out doing this won’t provide much relief in the short term.