February 12, 2010
Economic Snapshot | Feb. 10, 2010
With few exceptions, productivity growth across Canada has been sub-par
JOHN CLINKARD
consulting economist, CanaData
It is generally acknowledged that the key to Canada’s longer term economic health is our ability to increase productivity.
But while everyone talks about productivity, or more accurately the lack of it, in Canada, no one does anything about it.
In order to obtain a greater understanding of how and why productivity varies across the country, Statistics Canada recently published, for the first time, measures of labour productivity by province and by industrial sector between 1997 and 2008.
Over this period, total productivity for the country as a whole increased by an average of 1.3% per year.
Between 2003 and 2008, however, productivity growth was significantly slower (0.6% per year) than it was during the period 1997 to 2002 (1.9%).
Across the country, productivity growth in Newfoundland (+4.5%) between 1997 and 2008 outpaced the rest of the country by a wide margin.
This strong growth was in part due to the launch of offshore oil production facilities and the ensuing surge in petroleum output.
In Central Canada (Ontario and Quebec), productivity growth slowed from 1.9% per year in the period 1997-2002 to a mere 0.6% between 2003 and 2008, primarily due to weakness in manufacturing productivity.
In Alberta, the shift from the traditional oil industry to the more labour-intensive oilsands, and a concomitant expansion of the services sector, significantly depressed productivity growth.
In Saskatchewan, however, the strong growth of output per worker in agriculture boosted the province’s productivity growth, while in Manitoba the services sector was the main driver.
Looking forward, as Kevin Lynch recently noted in the Globe and Mail, Canada urgently needs to adopt measures that will lead to stronger growth of productivity.
Lynch stresses the need for increased effort to spur innovation, to strengthen the knowledge base of the labour force, and to expose our markets to increased competition in order to accelerate the adoption of new technology.
Failure to undertake these measures significantly increases the risk that Canadians will experience a significant deterioration in our standard of living over the mid-term.
John Clinkard has over 30 years’ experience as an economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Growth of private sector labour productivity by province - 1997 to 2008
Data Source: Reed Construction Data, CanaData
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