Falling productivity in Canada has been 50 years in the making. Here’s what we can do about it

Our lagging productivity isn’t a new problem.
If you were to tell Canada’s economic story over the last 50 years, a relentless decline in labour productivity would be the perpetual theme.
In 1970, the Canadian worker’s productivity was approximately 90 per cent of the same worker in the U.S. By 2022 it was just over 70 per cent.
To put this another way, an American contributes approximately $130 to the national economy with the same time and effort that a Canadian contributes about $100. And that difference makes us a poorer and less prosperous as a nation.
According to the OECD, Canada ranks 29th out of 38 countries for labour productivity. And this trend seems likely to continue: our labour productivity has slipped in 12 of the last 15 quarters.
One way to look at the problem is through the tools and innovative techniques our workers can use — but often don’t. If Canada is using a screwdriver to assemble prefab furniture, then the U.S. is using a power-drill. And highly productive economies like Norway build furniture in an automated plant where a worker produces multiples of what a Canadian could.
There’s no doubt that an important step in increasing our productivity will be companies investing in more productive workplaces, while government fosters the economic conditions for value creation in our country, attracting investment, incentivizing innovation, and rewarding success. Again — this is one way to look at the problem.
Another way to look at the problem is through a lack of trust in both the principles of economics and our institutions. The data bear this out. In July, the Canadian Maru Household Outlook Index saw 67 per cent of Canadians say that we are on the wrong track when asked about the state of the economy. Adding to that, the 2024 Edelman Trust Barometer put government in third place as the most trusted institution among Canadians, with NGOs in second place, and employers as the most trusted institution.
What this means is that Canadians don’t trust the direction of the economy, but they do trust that their employers are well positioned to find the solutions to our economic challenges. It’s a signal that Canadians have become increasingly alienated by the refrain of economic growth and the way we talk about it. Yet when they take part in growth and economics, we find much greater trust and an opportunity to cultivate optimism.
This is a critical consideration at a time when many Canadians think economic growth will result in more crowded schools, hospitals and emergency rooms, increase their cost of living, and make homes and rent even more unaffordable. This perspective has manifested itself in increased skepticism about immigration, and fewer Canadians believing that growth will support their hopes for the future or the pursuit of their personal goals.
Policymakers have taken note, and are jumping to respond to the latest economic hot potatoes. Instead, we should bring Canadians and businesses into the fold and create policies that empower them to lead in their communities to ensure that they thrive for generations to come.
We need long-term proactive economic policy that rewards new ideas and processes and applauds success, while easing the burden of doing business, incentivizing innovation, creating jobs, and increasing the productivity of the workers in those jobs. This will lay the foundation for meaningful growth and will help more Canadians see that their everyday challenges, such as affordability, are directly related to growth, and that growth is good.
Because growth is, in fact, good — it’s what allows us to invest in social services and strong communities, have healthy and wealthy populations, and build an inclusive economy that creates a better life for everyone. But until we start talking about productivity in a way that highlights the very real downstream benefits for everyday Canadians, they won’t trust that growth matters, and policymakers won’t have a reason to make it a priority.
For all these reasons, it should be cause for concern when Canadians, especially younger generations, don’t see how their well-being is served by a strong and healthy economy, let alone increased productivity. Our response to this concern should be a genuine reflection on what resonates with Canadians. Because the data show that progress and prosperity will come from Canadians increasingly engaging in commerce — taking part in the economy alongside businesses, which they trust more than any other institution to make their life better.
And for its part, government will need to commit to fostering this relationship, partnering with the business community, and encouraging Canadians to both trust it and see themselves as part of it.