Canada has a productivity problem.
This isn’t something new as our national productivity has been waning for many years. The Bank of Canada has gone as far as declaring a productivity emergency.
It comes as no surprise that the pandemic set us further back, but many economists expected a strong economic rebound given the strength of our banks and institutions. This rebound has yet to come causing concern among policymakers, business owners and voters alike.
There are many contributing factors as to why this is the case, from a lack of capital investment, our appetite for risk and innovation (or lack thereof) or Canada’s supply and demand challenges.
But to find solutions, it’s best to understand the problem more holistically.
So what is “productivity” in an economic context?
In simple terms, productivity tracks the value and output generated by each employee within a country. On a national scale, there are a few ways that productivity is measured:
- Labour productivity is the ratio of the total value created, which is often measured in GDP against the total hours worked. So, growth in labour productivity can enable increased wages, an improved standard of living and thereby better purchasing power for Canadian consumers.
- Capital productivity measures how things like equipment and infrastructure generate goods and services. Often, both labour and capital productivity are looked at synonymously when determining a country’s productivity.
- Total factor productivity considers things like technology and innovation that result in improved efficiency, thereby resulting in productivity growth. Basically, productivity growth cannot be attributed directly to labour or capital. Think innovation from the perspective of streamlining redundant processes, software integration, automation, artificial intelligence, machine learning, and more.
So why do we care now?
Productivity has been front and centre in every provincial budget released in 2024 and it is a big part of the federal government’s 2024 budget earlier this month.
The federal government has allocated funding to Global Innovation Clusters, the agri-food sector, AI technology and research, businesses that work with IT systems and advanced technology, national R&D projects, and domestic talent, all to ensure the economy is more innovative and productive.
Critics are saying this isn’t enough.
In response to the federal budget, business leaders such as the Canadian Chamber of Commerce’s CEO Perrin Beatty noted that the investments weren’t “game changing.” He went on to say that Canada’s lagging productivity and stalled GDP growth means Canadians are becoming collectively poorer and working harder to just remain where they are today.
Is your organization playing its part?
Everyday Canadian business, companies, and organizations are doing one of two things. You are either driving productivity growth or stalling it. With either scenario comes an opportunity for your organization to play its part in righting the ship.
If your organization is in the driver’s seat, governments want to hear from you about what is working and how a similar approach can be applied to others, not just in your sector but across other parts of the economy.
If your organization is at the forefront of innovation, governments want to leverage your expertise, even to improve their own productivity. If you feel that current tax policies are uncompetitive and hinder innovation, governments need to understand your perspective.
There is also an ownable whitespace for thought leadership on this topic as Canadians are all ears.
If your organization is lagging, governments have introduced a myriad of measures to help like the lifetime capital gains exemption or investment tax credits at the provincial and federal levels. In other scenarios, though, you might find that certain policies leave more to be desired which leaves opportunity to advocate for improvements.
Here’s how NATIONAL can help
NATIONAL’s team of Public Affairs experts is always available to help your organization navigate this top-of-mind issue and the multitude of opportunities that come with it. From engaging governments at all levels to corporate storytelling and thought leadership, we can help position your company as a leader contributing directly towards driving Canada’s productivity growth.
