William Watson: To raise productivity, let Canadians profit from it

Last week, Pierre Cléroux of the Business Development Bank of Canada wrote here that for the first time in 15 years of making economic outlook presentations, he’s getting unprompted questions about productivity. It seems Canadians are having an “Aha!” moment about productivity, thanks to U.S. President Donald Trump’s tariff attack on their bottom lines.

Liberal Leader Mark Carney sells himself as someone who “understands how the economy works” (though someone who truly appreciated the mystery of markets would never make such a claim). Doubtless he figures he also understands productivity.

In a way, we all should. It’s not that hard. As Adam Smith writes on the first page of “The Wealth of Nations,” if your people don’t produce very much year over year, they’re not going to live well. If they produce more, they can live better.

The hard part is figuring out how to produce more.

Output per worker hour in all Canadian industries was $63.60 in 2023. That’s in 2017 dollars. Updating it with the Bank of Canada inflation calculator (which isn’t actually the right index to use but is the handiest), that’s $79.93. Eighty bucks, give or take.

On average, workers can’t be paid the whole $80. They weren’t the only ones producing it. They’ve got to share with the people running whatever operation they work for and also those supplying the capital they worked with. But, over time, how much they produce is a big part of how much they’re paid.

That $80 is an average for the entire economy. It varies a lot across the myriad activities that make up the Canadian economy. The highest private-sector average is in “mining and oil and gas extraction,” where it’s $267.31. The lowest is in accommodation and food services, only $31.80.

That