MRO Magazine

Growth in provincial labour productivity: a problem from coast to coast

Ottawa - Over the next two decades, Canada and its regions will have to contend with the challenges of more and more aging baby-boomers leaving the workforce, according to a new commentary, Growth in Provincial Labour Productivity: A Problem...


Human Resources

March 21, 2013
By MRO Magazine

Ottawa – Over the next two decades, Canada and its regions will have to contend with the challenges of more and more aging baby-boomers leaving the workforce, according to a new commentary, Growth in Provincial Labour Productivity: A Problem from Coast to Coast, by Alicia Macdonald, senior economist with the Conference Board of Canada. The result will be slower growth in the economy while simultaneously adding to demand and expenditures for health care.

One part of the solution to slower growth would be to lift productivity — a sure-fire way to boost income per capita and help the country pay for those public services we want and need, says Macdonald.

She reports that while Canadians hopeful for the future, the country’s past performance on the productivity front has not been strong. Numerous past studies have highlighted Canada’s poor labour productivity performance relative to the United States, but few have looked at the issue from a regional perspective. Productivity is not just a federal issue, she says.

This study looks at productivity among the provinces and find that with just one exception, poor productivity growth is a problem that exists from coast-to-coast. With the baby boomers contributing to slower economic growth and to rising health care expenditures across all regions, it’s vital that all provinces develop an agenda to boost their productivity growth, the report contends

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Over the 1998 to 2011 time period, the US posted average annual compound growth in labour productivity of 2.5%, while Canada posted average growth of 1.3% . But it’s no wonder that productivity growth for Canada as a whole has been so low when its three biggest provinces are productivity-growth laggards, notes Macdonald. Quebec and Ontario, for instance, posted gains of 1.1% and 1.2% respectively and in Alberta, the headline number is even worse, with growth of just 0.5% .

Only one province posted stronger business sector labour productivity growth than the United States and that was Newfoundland and Labrador. While Newfoundland and Labrador does have programs to promote productivity, the primary reason behind its productivity miracle was a structural shift in its economy, where an oil boom increased the contribution of the highly productive mineral fuels industry from an estimated 1.5% of real GDP in 1997 to 19.4% in 2011. Therefore, its success cannot be benchmarked by the other provinces. Moreover, looking only at the headline productivity growth rates does not tell the whole story. For example, Alberta has the weakest growth among the provinces, but it also has the highest level of labour productivity in the country.

To read the report, follow this link: http://www.conferenceboard.ca/economics/hot_eco_topics/default/13-02-20/growth_in_provincial_labour_productivity_a_problem_from_coast_to_coast.aspx.