the workforce is shrinking relative to the size of the population.
That depends on the range you look at. 51.88% of the population was in the workforce in 2001, increasing to 53.41% in 2023. We did peak at 54.55%. Either way, were talking relatively minor undulations
(Statscan 1 July population estimates and labour force characteristics)
Because the workforce has shrunk, relative to the need for workers. A larger population needs more production.
Your workforce assumption was misinformed, unfortunately negating the rationale. I also drill specifically into industries 61 and 611 to show the number of workers, and number of workers per student, is actually increasing.
Productivity is up only because capital has picked up the slack.
Capital is certainly part of it, but there have also been many improvements in I-O, timekeeping, and digitization.