By the numbers: Productivity

Productivity, the measure of outputting dollars per employee, is a common measure of the state of automation and information technologies in advanced manufacturing countries. In terms of living standards, since 2000, we have performed well compared to other G-7 nations, rising from the bottom of the list in the 1990’s to leadership since the year 2000. That income growth over the past decade has been driven by higher employment and exports along with a sharp rise in commodity prices. In productivity terms however, we lag the G-7 and more importantly, the US.

According to the recently released Department of Finance jobs report “The State of the Canadian Labour Market”, between 2000 and 2012 Canada’s Canadian Productivity Still Lags productivity growth of 0.8% was less than half the 1.9% rate of the US, and significantly lower than OECD average of 1.7%.  These disappointing numbers continue a trend that dates to the 1990s. The skilled labour shortage makes the problem worse, as work lost due to understaffed operations are not counted in the productivity figures. Add an aging workforce to these lost opportunities, and Canada will rely more heavily than ever on commodity exports. Will rising commodity demand from developing nations keep prices and therefore incomes high? There is no way to tell, making it more important than ever to close the productivity gap with updated equipment and higher levels of automation.