Canada’s Lagging Productivity

Philip Cross of Statscan has writen an interesting analysis of our very weak labour productivity performance in 2006. Output per hour growth has been very slow – a result of weak output growth combined with fairly strong job growth.

The key factor highlighted here is declining productivity in the mining sector as production shifts to less accessible resources, and as production from the tar sands lags well behind new investment.

Of note also, Cross highlights the fact that there has been no overall increase in manufacturing productivity which can be attributed to a shift in output from lower to higher productivity manufacturing sub sectors, 2004-06.

Put another way, the manufacturing crisis is impacting equally upon high productivity sub industries such as aerospace, as on low productivity sectors like clothing.

This throws in some question the mainstream view that the manufacturing sector can and will adjust to low wage competition by re-structuring towards higher productivity sectors.

Slow productivity growth is a major underlying cause of the poor average quality of new jobs created in 2006.

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