Canadian Productivity In The News

A Scotiabank economist today reflected on comments from a Bank of Canada official (Carolyn Rogers) that Canadian productivity has reached an “emergency level”. I am not surprised by what see on the street and within my accounting practice. The radical characterization is placed in the context of large age gains with thirty per cent of Canada’s work force tied to labour unions compared to ten per cent in the U.S.

Poor productivity combined with higher wages is a formula for disaster because businesses lose sustainability and without a private sector there goes the public sector jobs as well. The pulse I see around Calgary seems to be one of entitlement. The Oil and Gas crowd is back to strutting their stuff in the plus fifteens downtown because the oil price has taken a good run and geopolitical factors are creating a baseline of support for the commodity.

West downtown Calgary lacks vitality because behemoth pension funds and REITs in ownership of downtown office buildings are showing little wiggle room for the Tier 2 and Tier 3 leaseholder. Canadian employers are still way too lenient with the work from home model generated by the pandemic. Productivity is absolutely lost through poor supervision and communication yet tepid management teams across the country cower.  

Our education system has been poor at turning prospective students to the trades and the construction industry has been poor at making work environments friendly. This has got to change and change is in the making but the change is way behind when it needed to happen. This particular problem is a material contributor to the productivity challenge. 

The investment required to better the Canadian way of life unfortunately lacks “velocity”. In other words capital lurks in registered accounts and home equity with a conservative temperament at play due to rising interest rates and credit card debt at levels never seen before. 

It’s about time some economist in Canada stepped up and made an unequivocal statement having harboured the implications of  poor economic data.