economy
A CONCERNING DIVERGENCE How many Canadians does it take to screw in a lightbulb? According to the latest productivity data, the same number it took in 2017.
Productivity is an important measure of economic performance, as it is the magnitude of output we produce relative to the inputs required to produce it that determine our incomes and standards of living. Labour productivity—what we're able to produce in the hours we work—is what we'll focus on here. Labour costs, alongside the level of consumer prices, have risen sharply the past few years. And as with the goods and services we consume today, the amount we’re actually getting for our ever-increasing costs, labour or otherwise, has not followed suit.
What’s more, this trend actually pre-dates the pandemic—though it has accelerated since 2021—as the divergence of labour costs and productivity began in 2017. This trend cannot continue in perpetuity, as labour costs (incomes) will cease to rise without a commensurate increase in productivity in the long-run. To achieve productivity gains will require greater investment in technology, machinery, and education, alongside reduced regulatory barriers and increased competition.
DOING LESS WITH MORE
140
labour cost growth since 2017 +31%
130
120
110
100
productivity change since 2017 -0.3%
90
80
2010 2011
2019 2018 2017 2016 2015 2014 2013 2012 2020 2021
2022
2023 2024
LABOUR PRODUCTIVITY
UNIT LABOUR COST
DATA: INDEX OF LABOUR PRODUCTIVITY & UNIT LABOUR COSTS, SEASONALLY-ADJUSTED, QUARTERLY, CANADA SOURCE: STATISTICS CANADA. TABLE 36-10-0207-01
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