A StatCan report states that Canada has increased its working hours and wages, but labour output growth has decreased.
The report said Ontario, Quebec and Alberta, account for more than 80 per cent of the 2023 national decline in business productivity. In each of these three provinces, the construction sector was the main source of the decline in productivity, the report said.
But DT Cochrane, senior economist at the Canadian Labour Congress, said he believes the conversation around labour output has been misleading.
“I have concerns with the narrative about productivity beginning with the measure itself,” Cochrane said.
He said labour productivity is measured by the GDP adjusted for price changes and divided by the number of work hours.
Cochrane said the decrease in labour output has been discussed as if the absolute output has been declining, but it is the growth that has been declining.
This means Canada’s labour has still been growing, just not as much as in previous years.
“In 2023, the real gross domestic product (GDP) of businesses rose in all provinces and territories, except Newfoundland and Labrador and the Northwest Territories,” the StatCan report said. “However, in most provinces and territories, GDP growth was slower in 2023 than in 2022.”
The report said in 2023 the average compensation per hour worked in the business sector was up in every province and territory for the second consecutive year.
Nationally, hourly compensation rose 3.1 per cent in 2023 to $40.66 per hour, after increasing 7.0 per cent the previous year.
Some economists are still worried about the declining growth because they compare it to other first-world nations and find other nations’ labour outgrowing Canada’s, Cochrane said.
DT Cochrane said he believes this narrative hurts the overall dialogue because it hides the real issues in Canada’s economy and can influence policymakers to make judgements based on misleading facts.
“What bothers me is they [the Bank of Canada] make this claim that if we don’t see rising productivity and we continue to see wages increase, then we could see continued inflation, Cochrane said. “While [the] point about how we can have higher wages, in the absence of rising productivity, they kind of bury.”
He said what’s needed is for corporations to decrease their profit margins to pay for investments and higher wages.
However, Cochrane said he does not believe corporations will dip into their profit margins to pay for investment into Canada’s labour market.
Cochrane said if the private sector made investments, productivity would increase. Instead, corporations are pocketing profits and are continuing to outsource their productivity to cheaper labour markets or exploit foreign workers and students, he said.
“There are significant questions about how investment should actually be happening because corporations, the private sector, has dropped the ball to be totally frank,” Cochrane said.
He recommends Canadians stop looking to corporations to invest in the Canadian economy, move away from trickle-down economics, and instead look to the public sector to invest in Canada’s productivity.