International Productivity Monitor (Apr 2006)
The Economists’ Manifesto for Curing Ailing Canadian Productivity
Abstract
Most economists blame Canada's lackluster productivity performance in recent decades for sluggish growth in per capita incomes and a declining position in international rankings of economic well-being. Political leaders are reluctant to embrace a productivity agenda because of the public's confusion, indeed fear, of the subject. Many believe productivity is about working harder for less pay, or precisely the opposite of the economist's definition. Despite poor productivity growth, Canada remains a wealthy country. But there is ample reason for concern. Canada's level of productivity has slipped to 17th among OECD nations from third in the 1950s and 1960s. Unless our record is turned around quickly, Canadians' quality of life will stand still while other nations move ahead. This article summarizes the elements that are in common in most economists' recommendations on how to raise productivity in Canada. Some of the recommendations require governments to tackle issues such as removing interprovincial trade barriers and reforming employment insurance where firmly established interests would be rocked. The private sector would have to shed some complacency. But the pay-offs would be enormous. Economists have come together impressively on an action plan to raise productivity, now they need to hone their communications skills to convince the country to swallow the prescribed medicine.
