I haven't seen much, from any party, yet about addressing our national productivity crisis. I can only assume they think it's too difficult to explain to we mere mortals:
Time to break the glass: Fixing Canada’s productivity problem
Productivity is a way to inoculate the economy against inflation. An economy with low productivity can grow only so quickly before inflation sets in. But an economy with strong productivity can have faster growth, more jobs and higher wages with less risk of inflation. That’s why I want to talk about Canada’s long-standing, poor record on productivity and show you just how big the problem is. You’ve seen those signs that say, “In emergency, break glass.” Well, it’s time to break the glass.
Back in 1984, the Canadian economy was producing 88% of the value generated by the US economy per hour. That’s not great. But by 2022, Canadian productivity had fallen to just 71% of that of the United States. Over this same period of time, Canada also fell behind our G7 peers, with only Italy seeing a larger decline in productivity relative to the United States.
Improving productivity in Canada needs to be a priority for everyone, and there are two basic strategies for doing it. One is to have the economy focus more on the industries that add greater value than less-productive activities. The other strategy is to keep doing the jobs we’re doing but do them more efficiently. Ideally, Canada would use both strategies, leading to an economy with strong productivity growth and a large concentration of high-value industries.
Unfortunately, Canada’s recent record isn’t very good on either front. That may seem strange. After all, Canada is known for some high-value industries, such as energy and aerospace. But while the level of productivity here is high, the growth rates aren’t necessarily strong. At the same time, some industries in Canada have shown pretty good productivity growth over the past couple of decades.
1 But these include sectors such as retail and wholesale trade, which tend not to generate the same amount of output per worker as sectors like energy or aerospace.
Senior Deputy Governor Carolyn Rogers explains how higher productivity can protect the economy from future bouts of inflation and why fixing Canada's productivity problem should be a priority for all Canadians.
www.bankofcanada.ca
