Productivity Declining in Every Canadian Province, StatCan Reports

Workers make their way past a construction site in Toronto on April 16, 2021. (THE CANADIAN PRESS/Tijana Martin)

Productivity is on the decline in Canada with business performance dipping in all 10 provinces last year, according to the latest government statistics.

While productivity decreased 2.2 percent in Canada as a whole, marking the country’s third consecutive annual decline, three of its largest provinces shoulder most of the blame, a report from Statistics Canada found. Ontario, Quebec, and Alberta accounted for more than 80 percent of the national decline in business productivity in 2023.

Productivity is the number of products and services produced per hour and is key to a strong economy and high standard of living.

Ontario contributed -0.97 percentage points to the decline, Quebec, -0.55 percentage points, and Alberta, -0.25 percentage points, StatCan said, adding that the construction sector was the main source of the decline in all three provinces.

The productivity of businesses offering goods and services also recorded declines in all provinces, with the exception of British Columbia.

“These productivity declines occurred in a context marked by persistent inflation, high interest rates and several factors related to climate change,” StatCan said. “Combined, these impacted both economic activity and the labour market in most regions of the country in 2023.”

‘No. 1 Problem Facing Canada’

Investment and innovation are needed to boost productivity, yet the 2024 federal budget did not address this key concept and its impact on Canada’s economy, two experts told The Epoch Times.

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Jack Mintz, president’s fellow at the University of Calgary School of Public Policy, described plunging productivity as the “No. 1 problem facing Canada,” in a recent interview with The Epoch Times.

Concordia University senior economics lecturer Moshe Lander had a similar view, and blamed Ottawa for inaction on the issue.

“The biggest issue confronting Canada right now ... is lagging productivity,” he told The Epoch Times. “How do we boost productivity in Canada? There’s barely a mention of it in the budget.”

Canada needs better competition in its industries to boost productivity, Mr. Lander said.  He gave the example of telecommunications and the merger of Rogers and Shaw, completed last year, which reduced the “big four” companies in the industry to the “big three.” The budget could have included legislation to improve competition, he said.

“Productivity falls ... because businesses are not worried about losing their customers,” said Mr. Lander.

Mr. Mintz said other ways to boost productivity include lowering taxes and decreasing the regulatory burden on businesses.

Hours Worked Exceed Business Output

The number of hours worked increased more than business output in almost every province in 2023, contributing to the decline in productivity in all 10 provinces, StatCan said.

The gross domestic product (GDP) of businesses rose in all provinces in 2023, except Newfoundland and Labrador. Despite that, GDP growth was slower in 2023 than in 2022.

Canada’s real GDP per capita has been nearly stagnant since 2015, growing at 0.3 percent annually over the past nine years. That’s a full percentage point lower than advanced economies on average. The OECD, meanwhile, is predicting Canada will rank last for productivity growth over the next four decades among 38 developed economies.

Another consequence of Canada’s productivity problem is less money in government coffers. That could impact Ottawa’s ability to pay off its debt, says Steve Ambler, professor emeritus of economics at Université du Québec à Montréal.

“The thing that worries me in terms of federal government debt is we are currently in a period of extremely low productivity growth and low overall growth,” he previously told The Epoch Times.

Bank of Canada senior deputy governor Carolyn Rogers also warned last month that Canada’s poor productivity has officially reached emergency levels.

Tara MacIsaac and Matthew Horwood contributed to this report.