Earlier this year, a senior Bank of Canada official described Canada’s stagnant productivity as an “emergency.” ICBA’s Chief Economist, Jock Finlayson, has analyzed this growing concern and outlined practical solutions in his latest report.
From 2019 to 2023, Canada’s labour productivity declined, while the United States saw a 6% increase during the same period. This troubling trend has left Canada’s business sector productivity at just 70% of the U.S. benchmark—down from 85-90% in the 1980s and 1990s. Today, Canada ranks 18th globally in productivity.
Why does this matter? Productivity is the key to sustainable wage growth, better living standards, and economic competitiveness. High-productivity industries, such as oil and gas, technology, and manufacturing, consistently pay the highest wages. Yet, declining productivity threatens these gains and risks widening the economic gap with our trading partners, particularly the U.S.
How Can Canada Improve?
Jock Finlayson’s report emphasizes several strategies to reverse this trend:
- Boost Investment: Canada must increase non-residential capital investment in machinery, equipment, advanced technologies, and infrastructure.
- Tax Reform: A shift from income and capital taxes to consumption taxes could incentivize innovation and entrepreneurial growth.
- Regulatory Simplification: Streamlining regulations could lower costs and encourage expansion in key sectors.
Addressing Canada’s productivity emergency is critical for safeguarding our economic future. It’s time for policymakers and business leaders to prioritize this issue and implement solutions that will drive sustained growth and prosperity.
Read the full analysis by Jock Finlayson and discover how we can build a more productive Canada.
