Ten ideas to help solve the productivity crisis

It’s easy, by now, to quantify Canada’s persistent productivity problem. Canadians work more than most comparable nations, yet produce far less—79 per cent of our American neighbours, to be precise.

Canada’s labour productivity (that is, GDP generated per hour worked) lags behind that of more than two dozen of its OECD counterparts. Wages are virtually stagnant. Businesses invest half as much new capital in workers than U.S. firms. It’s like we’re trying to snowshoe through maple syrup — expending a lot of effort, with not a lot to show for it.

It is, of course, considerably harder to sort out what to do about all of it. But we can’t not try.

In that spirit, PPF welcomed 28 speakers, 11 moderators, 20 sponsors and more than 400 delegates to the Metro Toronto Convention Centre on April 11 for the Canada Growth Summit 2024. As PPF President and CEO Edward Greenspon put it in his opening remarks: “We need to put the pieces back in place.”

We learned a lot from the parade of whip-smart policymakers, politicians, businesspeople and economists who took to the stage. We heard that all the buzz about productivity is warranted: per University of Calgary economics professor Trevor Tombe, “The scale of the challenge, the speed that it is worsening and the importance of addressing are now bigger than in most of our lifetimes.” 

We found out that wonks want industry to fix the crisis: Most respondents to a hands-up poll posed by panel moderator and POLITICO executive Luiza Savage said productivity is a private-sector problem. And we discovered that Canadian firms are exploring AI as a productivity tool at barely half the rate of their U.S. counterparts: As DIGITAL CEO Sue Paish warned, “We’re a bit like a frog in cold water right now, if we’re not careful.”

But we came away with wind in our sails, as experts put forward actionable, informed, and — dare we say it — inspiring ideas to fix productivity once and for all. Here are 10 of our favourites.

Idea #1: Create a National Productivity Council

The difficulty of coordinating federal and provincial governments came up as a barrier to productivity over and over again. “The fact that regulations differ from one province to the next is a huge barrier to labour mobility,” explained the University of Calgary’s Tombe. His fix? “Perhaps we need to think about creating a new kind of arm’s-length independent agency, kind of what we have with the Parliamentary Budget Office.” 

A National Productivity Council might not be a new idea, he added — Canada once had something similar, which evolved into the since-dissolved Economic Council of Canada — but the current situation may warrant a resurrection, Tombe says we may need “something like that (that) puts productivity at centre stage — and something that’s independent of government.” 

Idea #2: Apply the gender-lens treatment to productivity 

On the subject of making productivity a national priority, Adam Chambers, the Conservative MP for Simcoe North, offered an intriguing suggestion. “I think we should demand from the machinery of governments a focus on (productivity),” he said. “This [federal] government has applauded itself very well for introducing gender-based analysis on everything they do. Well, for every decision that the government makes, maybe you could apply a productivity lens as well, if that’s the thing that we all think is the most important driver to unlock economic prosperity for the country.”

Live blog: Growth Summit wraps up unparalleled day of debate, insight and ideas on productivity

Idea #3: Reposition a chronic issue as an urgent one

Because productivity is a relatively abstract — and somewhat nebulous — concept, it tends to sit neglected on policymakers’ back burners. In a discussion on tackling productivity within the constraints of federal and provincial governments with different (and often competing) mandates, several panelists shared stories of how well different jurisdictions can work together in crisis situations — recent wildfires in B.C., for instance, or flooding in Nova Scotia. 

“I think one of the things that we can all do is (treat this) with some form of urgency,” said Ray Gilmour, Deputy Minister & Secretary to Cabinet, Government of Alberta. That made sense to moderator (and PPF Senior Fellow) Brett House. “The chronic is now urgent,” he summed up, “and the pressure to move is ever greater than it’s been before.”

Idea #4: Re-prioritize skills among immigrants

University of Waterloo professor Mikal Skuterud had a provocative, and unequivocal, fix for the productivity gap: Bring in more smart people. “It’s pretty clear it hinges on trying to attract and retain the top minds of the world … To make the population smarter. But we’ve moved very much away from that,” he said. 

Skuterud advocated for a return to a system like the old Comprehensive Ranking System, which assesses the human capital characteristics of applicants at entry, and predicts their future earning — a system scuttled to address unskilled labour shortages. 

“So now we’re prioritizing truck drivers and farm workers over computer scientists in our top universities. And there’s a zero-sum here — every permanent residency slot given to a low-skilled worker is one less slot for somebody else.”

Idea #5: Build better builders

The housing and productivity crises exist in lockstep, with a shared bugbear: There aren’t enough people building homes in Canada. And if we’re not letting new construction workers into Canada (see above), we have to create our own. 

As federal Minister of Housing, Infrastructure and Communities Sean Fraser said in an interview with CIBC Vice-Chair of Global Investment Banking Lisa Raitt, addressing this “is an opportunity to increase productivity, create good-paying middle-class jobs and solve a very big social problem at the same time.” 

How? Ramtin Attar, Co-Founder & CEO of construction robotics firm Promise Robotics, suggests doubling down on technical skills: “We need to retrain a whole generation of framers.” And Ana Bailão, Head of Affordable Public Affairs at Dream Unlimited Corp. recommended dismantling the job’s outdated reputation: “I think it’s on all of us to tackle the stigma,” she said. “We have to work with unions and colleges to ensure that people realize how much technology is actually now involved.” 

Idea #6: Invest in Indigenous talent and economic reconciliation

During the second annual Indigenous Ownership and Economic Reconciliation Breakfast — which kicked off the whole Growth Summit — several panelists pointed to the untapped skills potential of Indigenous people. “There is a dramatic under-representation of Indigenous voices in the business and finance space,” explained Jaimie Lickers, Senior Vice-President, Indigenous Markets, CIBC. “Our institutions will all be better for that increased representation.” 

To address this, Chief Sharleen Gale, Board Chair at FNMPC and Chief of Fort Nelson First Nation, spoke of the long-term payoff of supporting Indigenous skills development, citing an example of funding the education of a mother with five kids: “The hope is that she will come back and work for our people,” Gale explained. “That’s an investment.”

Labour shortages should also be overcome with growth in Indigenous communities. Penny Favel, Vice-President Indigenous Relations, Sustainability at Hydro One, noted that her company’s biggest pool of talent is Indigenous people. 

Idea #7: Amp up business ambitions

Murad Al-Katib, CEO of billion-dollar pulse powerhouse AGT, has a straightforward recommendation for what businesses can do to spark productivity: Think bigger. “I always say, you could either be dinner or you could be a diner, and I want to be a diner,” he said. “I want to be big enough that we can eat other companies, that we can become big and scale — that’s kind of not the ambition of Canadians.”

And the entities that support business have a responsibility to get out of their comfort zones, too: “Our challenge in this country is we have this mentality in government and in industry associations that we should sprinkle a little bit of fairy dust on everybody, and hope that everything’s gonna be OK,” he said. Instead, “let’s pick our winners, let’s scale our winners, and let’s recognize that there’s an opportunity.”   

Idea #8: Rethink supply chains

On the matter of who we buy and sell from, Carolyn Wilkins, Senior Research Scholar, Princeton University, and former Senior Deputy Governor of the Bank of Canada — made a clear-eyed case for rethinking our supply chains. “We need to reduce our dependencies on single points of failure in areas of the world that are facing geopolitical risks,” she said. “If we want to rethink supply chains that were working very efficiently, but weren’t resilient, that means they’re going to be more costly. And that means we need to build our own supply chains in a way that makes up for those losses in efficiency.” 

Wilkins pointed to the opportunity for Canada to benefit from the U.S. CHIPS and Science Act, which leverages partnerships while building local capacity — what U.S. Treasury Secretary Janet Yellen has called friendshoring. “Those are invested mandates, that are happening now, that are going to be there for 10 to 15 years. So if Canada misses the boat to be a part of that, we miss the boat for not just tomorrow or the next day, but many years. So there’s the opportunity.”  

Idea #9: Pick our spots, don’t grow at all costs

Amid all the enthusiasm about the productivity fixes on offer, Unifor Economist Kaylie Tiessen advised delegates to zoom out a bit. “(We need to) make sure we don’t forget about the purpose of growing productivity, which is improving our quality of life,” she said. “We need to make sure that we’re centered around people.” Take the U.S., the most natural country for Canada to compare itself to. That country’s surge in productivity has come with a side of tremendous wealth and income inequality, Tiessen said: “So let’s make sure we’re playing a longer game, instead of a short game, to get to where we want to go.” 

Idea #10: Show a little swagger. Lean in to our strengths 

It’s easy to get bogged down in the acute imperative for Canada to improve productivity. (Heck, we produced a whole conference about it!) But a few speakers challenged the audience to keep things in perspective. “Confidence is a vital part of investment,” said Dan O’Brien, Chief Economist, Institute of International & European Affairs. Canada has a lot of fundamental strengths, he explained — we have more skilled labour than many, for instance, and we’re globalized “better than most of the G7.” And while the pandemic and inflation have put us through the wringer, things could be much worse than they are. “Let’s not talk ourselves into too much doom and gloom.” 

A little later in the day, DIGITAL’s Paish picked up on the theme: “We (in Canada) have something that other countries would die for,” she said. “We’re trusted. We have absolutely world-leading research and development, which is critical when you look at things like AI. And we have a population that is demographically diverse.” Other countries want to work with Canada, she said, but they’ll lose interest if we dawdle too much. “We need to feel the sense of urgency,” she reasoned. “And we need to feel prouder.”