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The low productivity of Canadian companies threatens our living standards

The whole ‘knowledge’ based economy is a joke. If you can’t make items, you are subservient to those who can. Not to mention that knowledge gap between you and other nations needs to be maintained in order to work. Educating the competition ensures our obsolescence.

This is how the Europeans maintained their empires for several centuries, technological superiority. Once it started being shared their empires didn’t last long.

With our continually dropping standards, more rigid and inflexible society (i.e. even though you clearly know what to do because you don’t have ‘xyz’ you can’t), and lack of innovation its only a matter of time before this economy is a detriment to us.
 
But we've got excess amounts of arrogant smugness to share around :)


"Poor productivity is at the heart of the country’s growth challenges. In an hour a Canadian worker produces just over 70 per cent of what an American can — that’s below the euro area and even the UK based on 2022 data. Many would have expected the resource-rich economy to benefit as globalisation powered forward, but its relative labour productivity has actually slipped since 2000."



The Canada conundrum

The North American nation has vast potential, yet underperforms on the global economic stage

Canada rarely makes the global news. When it does, it is often in reference to the exploits of Canadian entertainers — Justin Bieber, Céline Dion and Drake. For a country of about 40mn people, roughly the population of California, that is not a bad return on celebrity icons. But while the country may exceed expectations in the pop and rap arena, it underwhelms on the international economic stage, relative to its vast potential.

By land mass it is the second-largest country in the world, with the longest coastline. Bookended by the vast Pacific and Atlantic oceans it has enormous trading advantages, alongside access to the largely untapped Arctic to its north. It is a net energy exporter; it has the third-largest proven oil reserves and is the fifth-largest producer of natural gas — but it also boasts large deposits of critical minerals vital to the green energy transition. And, of course, it borders the world’s largest economy. By any measure, Canada’s geography suggests it could be an economic powerhouse.

But few ever talk about it in such terms. By purchasing power parity, its economy is ranked 15th globally by size, behind the likes of Turkey, Italy and Mexico. The OECD has forecast Canadian per capita gross domestic product growth up to 2060 to be the lowest among advanced nations. Canada boomed at the turn of the 20th century. Settlements grew, industrialisation was in full swing, investment rolled in from the UK and US. In 1904 Wilfrid Laurier, then prime minister, predicted “the 20th century shall be the century of Canada and Canadian development”.

Yet, post-second world war expansion gave way to periods of high inflation, rising deficits and low commodity prices. Laurier’s forecast was not true for the last century and so far it is not true for the 21st either: PwC’s The World in 2050 report expects Canada’s global economic ranking to slip to 22nd by the middle of the century. Poor productivity is at the heart of the country’s growth challenges. In an hour a Canadian worker produces just over 70 per cent of what an American can — that’s below the euro area and even the UK based on 2022 data.

Many would have expected the resource-rich economy to benefit as globalisation powered forward, but its relative labour productivity has actually slipped since 2000. Canada has aggressively pursued free-trade deals; it is currently the only G7 nation to have such agreements in force with all other G7 members. But it has not been able to take advantage of that. “Two of the economy’s previous main drivers of economic growth — natural resources and manufacturing — have struggled to expand in recent years, due to a combination of a more onerous regulatory backdrop and increased competition from abroad,” says Stephen Brown, deputy chief North America economist at Capital Economics.

Researchers at HEC Montreal’s Centre for Productivity and Prosperity argue that Canadian industry is not strong enough to compete globally. Indeed, the country’s vast size, mountainous geography and provincial legislation may hinder competition, investment and innovation among its companies. The Business Council of Alberta estimates these internal trade barriers are equivalent to a 6.9 per cent tariff on goods. Protectionist measures on top have often coddled Canadian industry.

A lot comes down to population. Canada has one of the lowest population densities in the world. Its fertility rate has been declining sharply and it does not have enough people to capitalise on its economic potential. Priorities may also be different from those of other countries. Canada ranks high on health, education and life satisfaction indicators; its leading cities, Calgary, Vancouver, and Toronto, are considered among the world’s best to live in.

And the country consistently ranks among the top destinations for emigrants. Canada’s attractiveness as a place to live and its openness to immigration means there is scope to turn its demographic problems around. Last year, it achieved its highest annual population growth rate in more than 60 years, in part due to government efforts to recruit migrants. The climate transition is already raising demand for its vast copper and nickel resources as well. The melting of the Arctic ice shelf will open new trading opportunities for northern Canada.

Rising up the GDP tables is not the be-all and end-all for any nation. And clearly the Canadian lifestyle is coveted around the world — and not just in developing nations. Yet, as long as current trends in productivity continue, living standards will drop and Canada’s enormous economic potential will remain latent. That would be a great shame for the thousands moving there seeking a better life, and for the global economy.


The Canada conundrum | Financial Times (ft.com)
 
Researchers at HEC Montreal’s Centre for Productivity and Prosperity argue that Canadian industry is not strong enough to compete globally. Indeed, the country’s vast size, mountainous geography and provincial legislation may hinder competition, investment and innovation among its companies. The Business Council of Alberta estimates these internal trade barriers are equivalent to a 6.9 per cent tariff on goods. Protectionist measures on top have often coddled Canadian industry.

A lot comes down to population. Canada has one of the lowest population densities in the world. Its fertility rate has been declining sharply and it does not have enough people to capitalise on its economic potential. Priorities may also be different from those of other countries. Canada ranks high on health, education and life satisfaction indicators; its leading cities, Calgary, Vancouver, and Toronto, are considered among the world’s best to live in

Businesses to serve Canadians struggle because of the population density and distances. I have personally lived that problem.

On the other hand businesses built for export (Coal to Tsawassen and Prince Rupert, Gas to Kitimat, Hydro to the US, Grain and Sulfur to Vancouver along with the local lumber) thrive.

Now if only we had more export ports with better lines of communication to them.
 
At least we're doing better than Mexico and Spain ;)

Canada’s productivity has been declining. Why that’s a problem for the economy​


Canadians feeling like they weren’t as productive as they could’ve been in 2023 can take solace. Neither was Canada’s economy.
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Labour productivity — a broad measure of real gross domestic product by hours worked across the economy — has declined nationally in six consecutive quarters, Statistics Canada said last month.

Economists who spoke with Global News say this metric is critical for improving Canadian quality of life, and recent declines will be particularly worrying to the Bank of Canada as it gauges where to set its benchmark interest rate next.

“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,” says Pedro Antunes, chief economist at the Conference Board of Canada.

Canada is in the middle of the pack of countries in the Organisation for Economic Co-operation and Development (OECD) when it comes to productivity, according to a November analysis from BMO chief economist Doug Porter.

While the country outperforms Mexico and Spain on labour productivity, Canada trails the United States and a swath of Scandinavian nations by a fair margin. Porter notes that while OECD figures only go up to 2021, Canada’s productivity has only fallen since then.

What’s dragging down Canada’s productivity?​

Russia’s war in Ukraine is stymying supply chains and among the factors that have contributed to stalled global productivity. A boom in working from home post-pandemic hasn’t delivered the productivity gains that some economists predicted.

Why productivity is falling in Canada specifically, however, is not straightforward.

In Porter’s November report, he lists myriad macro-factors that are commonly cited as contributing to Canada’s productivity lags: high levels of concentration in Canadian industries; interprovincial trade barriers; weak private sector R&D; and a “lack of entrepreneurial spirit.”

Those issues compound with some structural challenges that policymakers would find it hard to respond to with legislation. Canada’s geography and harsh winter weather contributes to inefficiencies in transportation, Porter says.

Among the main issues, according to Antunes, is that Canadian workers just don’t have the capital at their disposal that counterparts in other nations do.

Canadian employers are “significant laggards” relative to nations like the U.S. when it comes to capital stock available to workers, he explains. This can refer to infrastructure like roads, machinery to accomplish a task, research and development funding or even leveraging software — anything that makes a job easier and more efficient to perform.

“Imagine if I were working in construction with a shovel versus somebody working with a backhoe,” Antunes says. “The capital stock per worker is very important in driving output per hour worked.”

 
High federal, provincial and other taxes kill business and entrepreneurial activity... and then there are the skyrocketing minimum and 'living wage' costs, and an 'organized labour friendly' environment.
I feel that this is a major reason why so many businesses choose to outsource or relocate their facilities abroad. Not saying that it's a good thing.

When Henry Ford was asked why he was adopting robot technology he replied "At least I don't have to deal with the robot's union." ;)
Well, I understand why he said that. He ran a business and he wanted to make money. But I feel that we as a society shouldn't only focus on profit. Businesses exist not just for their owners but for the employees as well. One of a business's goals should be to provide the workers with wages so that they can live and raise a family.
 
Productivity going to take an even bigger hit as the business investment incentives are eliminated completely…

 
Meanwhile, adding straws to the camel's back...


WFH’s staunchest proponents just dropped a bomb: Fully remote workers are officially less productive​

Fully remote work is associated with 10% to 20% lower productivity than fully in-person work, WFH Research finds.​


The researchers have long maintained that some form of flexible work is the only way forward for most workplaces (“In 2023, we’ll be laughing at anyone who does anything else but hybrid,” Bloom told Fortune last fall). But their latest working paper, published by Stanford’s Institute for Economic Policy and Research, delivers a blow to work-from-home advocates: Fully remote work is associated with 10% to 20% lower productivity than fully in-person work.


 
They did note that the work is still getting done, and suggested it was a per hour productivity drop., and an actual solution was to have a coherent plan and giving managers and supervisors tools to offset some of those gaps.

DND isn't really doing that, and the arbitrary funding cuts to travel knee cap that, particularly when the complex PMOs have teams spread across 4 time zones, and frequently call on SMEs that are spread across the country for specific topics.

Concrete example, combat recoverability on warships calls on SMEs outside the PMOs, and not located in Halifax where BAE and the PMO teams are. Some recent workshops on a $60B project got delayed and cancelled due to not being able to get some folks on a place to Halifax from Ottawa. This is during the design review stage where if you don't fix things now it's basically rolled into the final design that will roll into production engineering. Fixing things later will cost a fortune, so a few grand in TD could cost millions later.

RTO when you spend a lot of your time working with people in different provinces doesn't actually give you any real collaboration, just means I'm sitting in an office on Teams calls instead of at home (where the connectivity is better and easier to focus on things).
 
Funny, all those restaurant jobs aren't helping much....

Canada’s Growth Challenge:

Canada has a growth problem. The economic momentum that propelled the country through the 20th century has faded in the 21st, and appears to have worsened since the pandemic. Higher interest rates have slowed per-capita output since 2019, but the problems run deeper than that. Our economy is now smaller than it was in 2019 when adjusted for inflation and immigration, and pretty much in the same place it was a decade ago.

Globally, we’ve fallen behind most major economies since 2000. At the turn of the century, the economic output of the average Canadian was on par with Australia. Today, Australians are almost 10% more productive, while their economy has grown 50% per person faster than Canada’s over the quarter century. We’re further behind the United States. Canada is 30% less productive than the U.S. and closer to lower-income states like Alabama in terms of economic performance than tech-rich California or New York. The result: We’ve fallen from the 6th most productive economy in the Organisation for Economic Co-operation and Development in 1970 to the 18th as of 2022.

Pretty much every Canadian has something at stake. The productivity gap with the U.S. stands at about $20,000 per person a year, putting Canadians’ wages roughly 8% below their U.S. counterparts. The gap has been even more taxing for capital. Anyone who invested $1,000 in Canada’s main stock index in 2000 would have $4,400 today; the same investment in the U.S. S&P 500 index would be worth $6000—a more than 35% difference.

Our relatively low productivity —the amount of production and income generated per hour worked in the economy— has been held back by a shortfall in investment, especially outside real estate, construction and public services like hospitals. As a result, we’ve not been able to capitalize on the immigration boom that has added seven million people—most of them working-age and well-educated—since the turn of the century and offset the retirement wave of baby boomers.

The deindustrialization of many parts of Canada has cut into the country’s overall prosperity. Manufacturing is half what it was to the economy in 2000, while mining has also shrunk. Oil and gas—once powerhouses of investment and growth—are showing signs of renewed strength, but investment levels remain far below what they were a decade ago. Agriculture has been a rare standout, as we’ll explore later in this report.

 
So, basically everything the Liberals have done since 2015 on the economy has been dead wrong.

Pretty much, apparently. Yet, having found themselves in a hole, they keep digging... ;)


Liberal budget fails the confidence test: fiscal policy, taxes and economic growth is getting worse​


On taxes, the budget sends a terrible signal. By raising the capital gains inclusion rate, the government admits it has a spending addiction. The consequence of keeping the taps open are costly: not only is the finance minister making the fiscal framework shakier going forward by growing our structural deficit (don’t believe the rosy projections), it raises taxes on private investment at a time when we need it the most.


 
Look at the idea of taxing homes valued at over 1 million dollars. Some professor came up with this idea.

It will fuck a lot of people.

Generation Squeeze is the organization that came up with this idea....I think

Communism under a different name.
 
Look at the idea of taxing homes valued at over 1 million dollars. Some professor came up with this idea.

It will fuck a lot of people.

Generation Squeeze is the organization that came up with this idea....I think

Communism under a different name.
Not gonna happen. There’s never any shortage of wacky ideas out there being pushed by one person or advocacy group or another. Until a party is concretely pushing for it, don’t let it stress you.
 
Look at the idea of taxing homes valued at over 1 million dollars. Some professor came up with this idea.

It will fuck a lot of people.

Generation Squeeze is the organization that came up with this idea....I think

Communism under a different name.
I read the financial post article where that comes from, and interestingly their solution is to have a cap on the principal residence exemption.

So, it does something similar in effect.

Also, for context, the NaPo article suggests that the tax would be 0.2 to 0.5 percent for 1-1.5 million, so $2000-5000. 1 percent for $2 million, or $20000 (which is a jump)

Interestingly, the CBC etc had a piece on this in early 2022, so it’s not exactly new.
 
Look at the idea of taxing homes valued at over 1 million dollars. Some professor came up with this idea.

It will fuck a lot of people.

Ouch.

Here’s a look at the June statistics from some of the country’s largest regional real estate boards:


Greater Vancouver Area

Benchmark price (all housing types) $1,207,100

Greater Toronto Area

Benchmark price (all housing types) $1,162,167

Montreal Area

Median Price (single-family detached) $451,000

Median Price (condo) $380,000

Calgary

Benchmark price (all housing types) $608,000

Ottawa

Benchmark price (all housing types) $647,700

 
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