
Understanding Labour Productivity
Judging by recent headlines there are cries of concern over the fact that Canada’s labour productivity has stalled over the past eighteen months. But statistics released by the Organization for Economic Cooperation and Development (OECD) indicate Canada’s labour productivity growth has been lagging behind the United States and other G7 countries since at least the the 1980’s.
What is labour productivity and why should Canadians be concerned? Labour productivity is a broad measure of real gross domestic product (GDP) by hours worked across the economy. According to economists the measure is a key indicator of whether quality of life in Canada is improving or not. In the words of Pedro Antunes, chief economist at the Conference Board of Canada: “What it really boils down to is a sense that if we are able to generate more income with each hour worked, then we’re better off for it.”
The Complexity of Canada’s Productivity Problem
According to BMO chief economist Doug Porter the issue is complex and there’s no easy solution for Canada’s productivity problem: “If there was a straightforward formula to dealing with Canada’s perennial productivity problem, it would have been long since unleashed.”
Immigration and Productivity
One of the foremost ways Canada’s policy makers have tried to address this problem has been to import new workers to sustain output. But the majority of these same new workers end up employed in the least productive sectors of the economy- retail, food and accommodation, rather than filling growing skills gaps. As evidence, a recent Statistics Canada report cited the fact that nearly 60 percent of Canadians working in the growing food delivery and ridesharing sector are landed immigrants. With a greater investment in skills training and development these workers could work in jobs in demand and with higher productivity.
Enhancing Skills Training for Adults
As part of turning this slide in productivity around, the OECD says Canada needs to take a look at its current adult learning system and questions whether it is ‘well equipped to deal with the pressing challenges associated with changing demand for skills.’ Not only new workers could benefit from enhanced skills training and development but also workers currently in the labour force whose careers have stalled or whose skills have become obsolete due to technological change and automation. The OECD suggests that ‘Canada’s adult learning system should equip adults with the foundational skills needed to weather evolving changes in skills demand including, social skills, verbal, reasoning and quantitative abilities’.
We need to help workers become more productive by providing upskilling opportunities to respond to growing skills gaps that are hampering economic growth. The OECD points to a key challenge being how to engage older and low-skilled workers who traditionally have low access to adult learning opportunities. The answer they say lies in ‘a sharper focus on flexibility, guidance, financing and the impact of training’.
A Call to Prioritize Skills Training
While not the only solution to our plunging productivity woes, a long overdue examination of our skills training system and our investment in training by both public bodies and industry are both attainable and in the long-term, beneficial to economic growth and wellbeing.
It is evident that to date our skills training efforts have not improved labour productivity. In fact our current approach may actually be impeding it. If we are to heed the guidance of the OECD and other economic experts we need to shift and accelerate our skills training efforts. We need to embrace the fact that our collective skills development efforts represent a single dynamic ecosystem. This requires collaborating and acknowledging that no single entity alone can address the multi-faceted challenges we face. We should be striving to create a shared approach that emphasises skills development and work-integrated learning and maximize the synergies that exist between formal education, on-the-job training and retraining opportunities.
By making skills development a higher priority, integrating real-world application of skills, and re-thinking our credentialing systems we can enhance and accelerate our efforts to address shifting demographics, labour markets and skills gaps to drive economic growth and productivity as well as enhance social inclusion.