future of productivity 2012


The future of productivity

Clear choices for a competitive Canada

Declining productivity is the most significant threat to Canada’s standard of living

Over the last decades, productivity in the Canadian economy has failed to grow at the same pace as the United States and other advanced economies.

  • Productivity growth in Canadian manufacturing averaged 0.88% between 2000 and 2008, well below the 3.3% rate of growth for U.S. manufacturing.
  • As labour costs rose between 2000 and 2007, Canadian business’ per-worker investment in labour-saving machinery and processes was only 52% of the U.S. investment.
  • 43% of new jobs come from the fastest growing 5% of all firms.
  • Only 2.66% of Canadian services firms five years or older are able to maintain high-growth. In the U.S. that number is 4.5%. In Israel it's 5.43%.
  • An over-reliance on NAFTA means that Canada has 10 Free Trade Agreements compared to Chile’s 52 thereby limiting potential growth.

This will have a negative effect on the Canadian standard of living.

Recommendations for increasing the number of high growth firms in Canada

The future of productivity contains recommendations for government, academia and business on what can be done to improve Canadian productivity.

Government needs to develop a national strategy to encourage competition:

  • Encourage more foreign direct investment.
  • Facilitate business and investor immigration to Canada.
  • Incentivize growth-potential and competitiveness among firms.
  • Expand internal and international trade, and reduce reliance on U.S. trade by removing inter-provincial barriers and signing more free trade agreements.

Academia has an important role to play:

  • Align curricula with business and industrial needs for scientists, engineers and leaders.
  • Develop, protect and exploit intellectual properties developed at the post-secondary level.

Canadian business needs to shed its risk-averse persona:

  • Compete outside Canada: it’s a bigger market.
  • Invest in technologies and processes to improve productivity.
  • Be creative in finding and keeping skilled employees.
  • Build business clusters to optimize use of capital, knowledge, equipment and other capabilities.
  • Invent and re-invent: invest in R&D.
  • Overcoming a productivity gap to ensure a prosperous future for Canada.
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