Canada's productivity woes going from bad to worse, warn economists
Canada’s productivity problem has gone from bad to worse, a panel of economists told a conference in Toronto Thursday.
Over an eight-year period, Canada has never seen slower labour productivity growth, said Trevor Tombe, an economics professor at the University of Calgary, during the annual Canada Growth Summit.
“The scale of the challenge, the speed of it worsening and the importance of addressing it are now bigger than in most of our lifetimes,” he said. The country’s productivity has fallen for the past 13 quarters and is now back to where it was in 2016.
Tombe appeared on the panel hosted by The Public Policy Forum on April 11 alongside former Bank of Canada senior deputy governor Carolyn Wilkins, Unifor economist Kaylie Tiessen and Dan O’Brien, chief economist of Institute of International & European Affairs.
The sense of urgency of the productivity issue involves forces that aren’t only affecting the Canadian economy but others as well, such as geopolitical tensions, said Wilkins, now a senior research scholar at Princeton University.
Those headwinds caused a rethink of supply chains to reduce dependency on single points of failure, including in areas facing geopolitical risks, she said.
“(It) requires massive long-term investments where you need to attract domestic capital and international capital to do it,” Wilkins said.
The topic has been in the news since Carolyn Rogers, senior deputy governor of the Bank of Canada, gave a speech last month raising the alarm about Canada’s lagging productivity level and its effect on inflation.
“An economy with low productivity can grow only so quickly before inflation sets in,” Rogers said March 26 in Halifax.
Rogers said Canada has fallen behind most of its G7 peers, with
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