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Most of us most likely do not perceive or care concerning the poor productiveness that economists and politicians are apprehensive about, however we should always. Joe O’Connor appears at clear up this Canadian disaster — and why it issues
Revealed Jun 20, 2025 • Final up to date 2 hours in the past • 14 minute learn
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Pedestrians cross a road within the monetary district of Toronto. Picture by Brent Lewin/Bloomberg
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Frances Donald was both having a extremely productive morning or a disastrous end to her workweek, relying upon one’s definition of disasters in relation to getting stuff accomplished.
Royal Financial institution of Canada’s chief economist dropped off her child at daycare and was right down to work earlier than 8 a.m. on June 6, which was not fairly a “Tremendous Bowl” magnitude day for economists, she stated, however extra alongside the strains of the “playoffs,” since Statistics Canada was about to launch its labour drive survey for Might and that’s the form of factor economists get fired up about.
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The unexpected twist got here shortly earlier than 9 a.m., when the daycare known as to say she wanted to choose up her baby due to an upset tummy. Generally pulling off the work/life juggle simply doesn’t go in keeping with plan. As Donald’s morning proved, nonetheless, most Canadians aren’t a bunch of lazybones kicking again on the sofa watching Netflix all day, however a bunch of grinders exhausting at work and at life.
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But that doesn’t jibe with Canada’s well-known points with productiveness, particularly in comparison with america and different international locations. That flagging productiveness over the previous couple of a long time has added one other layer of angst for policymakers, economists and others who take into consideration this nation’s future and make it higher.
“At the same time as a mainstream economist, I’m shifting away from merely pulling aside the statistics as a result of when you simply take a look at the statistics, you’re not seeing the entire image,” Donald stated. “The query is, how can we create an modern, scalable, resilient financial system?”
It’s a nice query, underscored with an excellent better urgency than ever to reply since some, equivalent to Financial institution of Canada’s senior deputy governor Carolyn Rogers in March 2024, have stated Canada is within the grips of a productiveness “emergency,” not a time period central bankers throw round frivolously.
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Equally mind-blowing, maybe, is to be taught that Canada throughout its centennial 12 months in 1967 was thought of the world’s third-most affluent nation, behind solely america and Switzerland.
Elevated productiveness is a win. It’s a present that retains giving
Philip Cross, the previous chief financial analyst at Statistics Canada
World productiveness rankings weren’t a factor again in these days, however Canada at the moment is 18th greatest, sandwiched between Italy and Spain — the nation that made taking a day nap well-known — whereas Eire is tops, begging the query: what within the identify of James Joyce has been happening round right here?
“Most individuals don’t perceive and possibly couldn’t care about productiveness, however there’s a really shut hyperlink between your productiveness and your earnings,” Philip Cross, the previous chief financial analyst at Statistics Canada, stated.
Productiveness, he stated, boils right down to how briskly you are able to do your work and do it accurately. The sooner the work will get accomplished — precisely — the extra time there’s to do different issues equivalent to hanging out with mates, volunteering or taking good care of enterprise at residence.
Transformed into {dollars} and cents, productiveness measures the quantity of output per hour labored. Forty years in the past, Canadians generated 88 per cent of the worth of Individuals per hour labored, however that dropped to 71 per cent by 2022.
That’s one thing all Canadians ought to care about since Individuals generate US$91.50 per capita per hour labored versus US$71.90 for these north of the border. In different phrases, labour productiveness is just not an summary statistic, however the elementary financial measure of a rustic’s prosperity.
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“Elevated productiveness is a win,” Cross stated. “It’s a present that retains giving.”
A extra productive Canada could be residence to locals flush with extra money and the means to purchase higher automobiles, homes and different issues, however it might additionally present higher roads, hospitals, public colleges and transit, and provides the nation a greater probability of retaining its homegrown expertise, which is essential to sustaining future productiveness.
Working smarter
“While you speak about productiveness, too many Canadians assume, ‘Does that imply I’m imagined to work more durable, as a result of I’m already working as exhausting as I can and I’m juggling my household and I’m teaching the minor hockey crew,’ and so forth,” John Manley, the one-time deputy prime minister and present chair of funding banking agency Jeffries Canada, stated. “Productiveness is just not about working more durable; it’s about working smarter.”
Manley is 75, however views retirement as a quaint relic of the twentieth century and needs the identical had been true for Canada’s productiveness disaster. It’s a topic he first publicly addressed in a 1999 speech on the Empire of Canada Membership in Toronto.
In case there have been any skeptics within the Bay Road crowd that day, he identified Ontario was about as productive as “Mississippi”; per capita earnings within the U.S. on the time was 30 per cent increased than in Canada, and this nation had the bottom price of productiveness development among the many G7 through the previous 25 years.
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Former deputy prime minister of Canada John Manley Picture by Gavin Younger/Postmedia
Time has marched on, however occasions haven’t modified on the subject of the productiveness challenges bedevilling the nation. These embrace, in no specific order, inside commerce obstacles, companies sitting on their wallets as an alternative of constructing capital investments, matching immigrants to jobs that use their expertise, authorities crimson tape, an absence of entry to capital, prosperity-killing company tax insurance policies, an absence of competitors in sure components of the financial system, not sufficient innovation and never sufficient willpower to do something to resolve the issue.
One of many trickiest mountains to climb, Manley stated, is that Canada is just not an entire productiveness catastrophe and continues to be a comparatively affluent nation.
“Canadians are likely to have this angle of when you don’t have to repair one thing as a result of it’s exhausting to repair, then why would you repair it?” he stated.
However Manley is aware of firsthand Canadians are greater than able to making powerful fixes. Within the Nineteen Nineties, a Wall Road Journal headline proclaimed that Canada was an “honorary member of the Third World.” The nation’s credit standing had been downgraded, the deficit was ticking previous half a trillion {dollars} and 34 cents of each tax greenback collected was going towards servicing the debt.
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It was an existential fiscal disaster, and Jean Chrétien’s authorities wanted to take drastic motion, not essentially as a result of they liked the thought of constructing change, however as a result of the nation now not had a alternative.
Again in these days, Manley was trade minister. He oversaw a division that in the reduction of to 9 applications from 54 and laid off 25 per cent of its employees. Switch funds to the provinces had been slashed. It was an unpleasant time, he stated, however by February 1998, the federal government delivered Canada’s first balanced price range in 30 years.
Disaster solved. The ethical of the story? Change is tough, however it’s not not possible.
Altering attitudes
Among the many adjustments that at present must be made is a widespread shift in opinion about extractive industries equivalent to oil and fuel, mining and forestry.
“We generally don’t wish to admit it, however it’s our pure sources that pay the payments in Canada,” Manley stated. “We shouldn’t be ashamed of that.”
However the productiveness challenges confronting the power sector, for instance, are way more advanced than most individuals in city centres assume.
As soon as upon a time within the oilpatch, Scott Saxberg, the founder and former chief govt of Crescent Level Power Corp., now referred to as Veren Inc., stated there was loads of investor capital to go round.
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Canada was the place to be when he initially received into the sport within the early 2000s. He didn’t know any of the “guidelines,” however what he discovered was a regulatory surroundings that, 12 months over 12 months, grew more and more dense. There at all times gave the impression to be a brand new regulation being layered on high of an outdated regulation and that introduced on elevated uncertainty. Buyers, he stated, hate uncertainty.
The Individuals delaying and ultimately quashing the Keystone XL pipeline was one other blow, and the bruises ultimately started so as to add up.
Saxberg remembers assembly a possible investor in Scotland and feeling assured about reaching a deal proper up till the gentleman seemed down at his telephone, seemed again up and stated he was not going to speculate as a result of it appeared Keystone XL was not going to fly. With out the brand new pipeline, any power firm producing in Canada could be at a “value drawback in comparison with producers within the U.S.” Finish of assembly.
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Miles of pipe for the Keystone XL pipeline sit unused in 2014. The Individuals delaying and ultimately quashing the pipeline was a blow to Canada’s oilpatch. Picture by ANDREW BURTON/GETTY IMAGES
“Capital is aggressive; it strikes across the globe,” he stated. “So while you hear the phrase competitiveness, what meaning is you need to create a rustic with an surroundings that pulls capital and out competes different international locations for that capital as a result of capital appears at an trade on a macro foundation and it goes, ‘Effectively, you’re not going to be long-term funding, so we’re going to look elsewhere.’”
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Alberta’s oilsands had the added drawback of being a extra expensive product to supply, in addition to being subsequent door to the U.S., which underwent a fracking craze and accomplished 5 new pipelines in 2024 alone, in keeping with the U.S. Power Info Administration.
In the meantime, a number of worldwide gamers, together with TotalEnergies SE, BP PLC, ConocoPhillips and Shell PLC, have exited the province in recent times.
Wooing them again, Saxberg stated, goes to require streamlining rules, rising capability to maneuver oil and pure fuel to market (whats up pipelines) and a recognition that Alberta and Saskatchewan should not the unhealthy guys, however key drivers of Canadian prosperity.
The federal government-owned Trans Mountain Pipeline is a poster baby of productiveness. It requires about 750 individuals to function, provides Canadian oil producers higher entry to abroad markets and is anticipated to supply $2.8 billion in tax revenues by 2043.
“That pipeline produces a product that goes into worldwide markets and the cash comes again to Canada and we put it into well being care, schooling, roads, bridges, tunnels and no matter else,” Manley stated. “Think about what we might do with extra of the above.”
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Manufacturing positivity
Dreaming of a future full of latest pipelines can steal consideration away from a few of the extra upbeat and unsung productiveness tales within the current day. If Canada had been to nominate a chief storyteller to convey these yarns, Linda Hasenfratz, chair of auto-parts manufacturing large Linamar Corp., ought to get the nod.
She’s the kind of one that can take a look at a “drop of water in a glass and see it as half full,” one one that is aware of her effectively stated.
Hasenfratz can be the kind of govt who makes use of charts and graphs to hammer residence factors throughout an interview. Topping her checklist of key takeaways is that Linamar has boosted its productiveness by 100 per cent over the previous 15 years.
Over the identical timeframe, the Canadian manufacturing sector as a complete improved its productiveness by about 50 per cent, which, maybe surprisingly, outpaced the U.S. sector’s positive factors.
Linamar has 75 crops worldwide and ranks its Canadian ones as its best. Toyota Motor Corp.’s Canadian crops are its greatest performers, in keeping with auto trade analyst J.D. Energy, and Normal Motors Co.’s facility in Oshawa, Ont., persistently ranks as its high manufacturing unit in North America.
In different phrases, Canadian operations are competing and look like crushing it.
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Linda Hasenfratz, chair of auto-parts manufacturing large Linamar Corp., when she gained EY Entrepreneur of the Yr in 2014. Picture by Glenn Lowson for Nationwide Put up
However one impediment to that dynamic exhibiting up on Canada’s backside line is authorities, Hasenfratz stated. Practically one per cent of all Canadians are federal staff. Between 2010 and 2023, the federal government’s headcount grew by 26 per cent. Greater than 2.5 million Canadians labored for not-for-profit organizations in 2023, in keeping with authorities statistics.
Mixed, Hasenfratz stated meaning far too many well-educated Canadians are working in areas that don’t make a dime.
“We have to get extra individuals into revenue-generating companies and that might have an infinite constructive affect on productiveness,” she stated.
Hasenfratz additionally identified that the tales we select to inform about ourselves matter.
“While you hear issues like Canada is just not productive, that isn’t very inspiring, and it doesn’t make you assume, ‘Rattling, I’m going to get in there and be extra productive tomorrow,’” she stated. “However when you see an instance of an organization that has doubled its productiveness over the previous 15 years and in doing so has gained enterprise, grown revenue and realized an incredible return on funding, then you definately’ll be like, ‘I need to try this,’ as a result of that’s inspiring.”
Actuality test
Trevor Tombe, a College of Calgary economics professor, acknowledges Canada is awash with unrealized potential, however stated there are points in making an attempt to understand these positive factors.
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Let’s think about Hasenfratz and her manufacturing sector buddies, oil producers and agriculturists are all in a position to generate extra of what the world desires for export — particularly to locations apart from the U.S. All that stuff would want to get loaded into huge container ships on the ports of Vancouver, Montreal and Halifax.
However the Port of Vancouver is already the most important on the North American West Coast and is dealing with file ranges of cargo. An enlargement that has been within the works since 2013 is not going to be accomplished till someday within the 2030s. Montreal received the ball rolling on its port enlargement in 2018, however it’s nonetheless in progress and an extended methods away.
“If you wish to promote to a different nation past america, you aren’t doing it by truck or rail; you’re doing it by port as a result of there’s an ocean in the best way,” Tombe stated. “Proper now, we don’t have any extra port capability that might enable us to commerce way more with different international locations, and when it comes to a building timeline in Vancouver, it’s plausibly 20 years from begin to end.”
If Canada is unable to get its items transferring, diversify its commerce companions, develop exports to China, Japan, South Korea, India and so forth, the U.S. is left as the one possibility. That’s not an incredible place to be in when negotiating a brand new commerce take care of Donald Trump.
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An enlargement of the Port of Vancouver has been within the works since 2013 and won’t be accomplished till someday within the 2030s. Picture by Postmedia
One possibility is to construct ports elsewhere, equivalent to the Arctic. There at present isn’t a deepwater port to talk of there, however there’s been loads of discuss of constructing one — some day.
“There isn’t just financial and productiveness implications of unhealthy federal coverage round infrastructure, however nationwide safety implications,” Tombe stated.
One other space in want of a makeover that doesn’t require something extra sophisticated and time-consuming than taking part in round with some accounting software program datasets is tax coverage.
Small companies, outlined as corporations with lower than 500 staff, make use of virtually 50 per cent of the labour drive. However they don’t make capital investments in equipment and tools on the similar ranges as Canada’s G7 friends, other than the Italians, who make investments even much less. A employee who lacks the newest instruments is just not as productive because the employee who does.
Corporations that retool an meeting line, improve laptops and arm employees with best-in-class devices are in a position to write off the expenditures over numerous years, however that “delays the worth” of the tax deductions, Tombe stated.
Have been an organization in a position to write off the brand new laptops in a single fell swoop on the time of buy, effectively, now we’d be speaking, he stated, and the dialog would result in an surroundings the place corporations are inspired to reinvest at the moment.
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“It’s a approach to minimize company taxes on new funding whereas sustaining company taxes on corporations as a complete, so it’s less expensive than simply dropping the company tax price itself,” he stated.
That will appear a straightforward factor to do, and the identical goes for an additional productiveness repair that pertains to Canada’s secret weapon: immigrants.
Walid Hejazi, an economics professor on the College of Toronto’s Rotman Faculty of Administration, meets numerous them, and he stated the outdated joke concerning the backseat of a taxi being the most secure place to have a coronary heart assault nonetheless holds up, although the taxi-driving physician from overseas at the moment might be behind the wheel of an Uber.
Hejazi, by the college, works with a bunch of immigrant girls who all have college levels from one other nation. They’re sensible, savvy and wanting to develop into productive new Canadians.
“Have you learnt what the No. 1 job these girls get provided is?” he stated. “Serving espresso at Tim Hortons.”
Rotman places the newcomers by a crash micro-business course. If efficiently accomplished, that earns them a micro-credential from the college, which hopefully catches the attention of a synthetic intelligence employment screener and will get them a face-to-face interview with one other human.
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“The purpose right here is to match the ladies with jobs which might be extra commensurate with their expertise,” he stated.
As for being in comparison with the U.S., he stated being neighbours has been a present. We share the identical language and customs, typically get alongside and discover it simple to do enterprise with each other to the extent that Canada’s ho-hum productiveness degree has not been a handicap.
However the place it begins to be a giant drawback is when the U.S. closes for enterprise and Canadian corporations are compelled to win market share overseas.
“It’s comparatively simple for a Canadian firm to do enterprise within the U.S., and it requires productiveness at a given degree,” he stated. “However to go to Europe and Asia and compete requires a a lot increased productiveness degree.”
Past the numbers
Canada could also be having a productiveness “emergency,” however its productiveness is enhancing, simply at a slower price than different international locations with related attributes. That’s partly why Frances Donald will get the urge to “vent” when she speaks about productiveness, since obsessing over the numbers can obscure a extra elementary query: What sort of Canada do Canadians aspire to?
“You can conceive a plan that might mechanically enhance our productiveness quantity,” she stated. “However it wouldn’t truly make the Canadian financial system higher for many Canadians.”
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For instance, not all these productivity-sapping public-sector staff are directors pushing paper round. They’re additionally lecturers, cops, wildfire fighters and medical doctors. Shut to twenty per cent of Canadians have already ticked previous age 65, and odds are {that a} care facility is of their future sooner or later.
“If I instructed you that we might quadruple the variety of high-productivity engineers, however we dramatically scale back the variety of medical doctors and that might lead to increased productiveness statistics, then you definately would possibly hear Canadians say, ‘Might I please decide the health-care staff over the high-productivity engineer?’” Donald stated.
Economists have spent a decade highlighting Canada’s productiveness ills, from inside commerce obstacles to diminished funding within the pure useful resource sector to an reasonably priced housing disaster that solely will get worse by the 12 months.
It’s a drumbeat of doom that may overshadow what Canada has, mainly, a extremely educated inhabitants, an enormous breadbasket of agricultural items, oil and fuel and demanding minerals galore and loads of room for the world’s greatest and brightest who could also be eager to signal on.
“In Canada, we don’t must ask what we’re going to bake out of nothing as a result of we have already got an extended checklist of one thing,” Donald stated. “Our mission is to have a collective understanding of what this nation has been blessed in, from issues within the floor to our extremely excessive degree of schooling — spanning from items to a blossoming providers sector. Canada is just not quick on the substances to construct a strong financial system; the place we’ve fallen quick is on the execution.”
• E-mail: joconnor@postmedia.com
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