Canada’s productivity has been declining. Why that’s a problem for the economy
Canadians feeling like they weren’t as productive as they could’ve been in 2023 can take solace. Neither was Canada’s economy.
Labour productivity — a broad measure of real gross domestic product by hours worked across the economy — has declined nationally in six consecutive quarters, Statistics Canada said last month.
Economists who spoke with Global News say this metric is critical for improving Canadian quality of life, and recent declines will be particularly worrying to the Bank of Canada as it gauges where to set its benchmark interest rate next.
“What it really boils down to is a sense that if we are able to generate more income with each hour worked, then we’re better off for it,” says Pedro Antunes, chief economist at the Conference Board of Canada.
What’s dragging down Canada’s productivity?
Russia’s war in Ukraine is stymying supply chains and among the factors that have contributed to stalled global productivity. A boom in working from home post-pandemic hasn’t delivered the productivity gains that some economists predicted.
Why productivity is falling in Canada specifically, however, is not straightforward.
Steve’s note
Hard to feel productive when your wages aren’t keeping up to the cost of living. It’s demoralizing — nobody wants to spend money. So, less products and services are required.
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