New data from Statistics Canada are a reminder that Canada’s productivity problems are built from the ground up.
Companies have indicated that they intend to increase their spending by a much more respectable 4.7 per cent in 2023. Still, after, real R&D investment has been contracting during a two-year period in which businesses have faced persistent capacity pressures and extremely tight labour supplies. And in a time when the country has committed to aThese conditions provide oodles of incentive for businesses to invest in productivity-enhancing improvements.
Starved of these tools for growth, it’s no surprise that productivity is stagnating. Labour productivity – measured by the amount of gross domestic product per worker – has fallen in nine of the past 10 quarters, and is now below prepandemic levels. As businesses have hired more and more staff during the recovery, each staffer has produced less and less.
Certainly, in the long run, that third choice is best. Productivity growth feeds sustainable income growth, raises economic capacity and wealth, supports a rising standard of living. In its absence, wage growth stagnates, business growth stalls and the economy overall struggles.